18-23302-rdd doc 5-1 filed 08/27/18 entered 08/27/18 17:57

EXHIBIT A

Interim Order

18-23302-rdd Doc 5-1 Filed 08/27/18 Entered 08/27/18 17:57:01 Exhibit A - Interim Order Pg 1 of 100

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

INTERIM ORDER (1) AUTHORIZING THE DEBTORSTO OBTAIN POST-PETITION FINANCING, GRANTING

SENIOR POSTPETITION SECURITY INTERESTS AND ACCORDING SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS PURSUANT TO

SECTIONS 364(c) AND 364(d) OF THE BANKRUPTCY CODE, (2) AUTHORIZING THE USE OF CASH COLLATERAL, (3) GRANTING ADEQUATE PROTECTION,

(4) MODIFYING THE AUTOMATIC STAY, AND (5) GRANTING RELATED RELIEF

Upon the motion (the “Motion”) of the above-captioned debtors and debtors in

possession (collectively, the “Debtors”) seeking, among other things:2

(1) authority pursuant to sections 363 and 364(c) and (d) to obtain debtor-in-possession secured financing in the form of:

(a) a senior, secured, priming and superpriority revolving credit facility (the “DIP Revolving Facility”) issued pursuant to the terms of (i) this Order, (ii) an order approving the Motion on a final basis (the “Final Order”), (iii) the Debtor-In-Possession Credit and Security Agreement, by and among the Debtors and CNH Finance Fund I, L.P. (the “DIP Revolving Credit Agreement”), and (iv) the “Loan Documents” as defined in the DIP Revolving Credit Agreement (collectively, with the DIP Revolving Credit Agreement, the “DIP Revolving Financing Documents”); and

(b) a senior, secured, priming and superpriority term credit facility (the “DIP Term Facility”) issued pursuant to the terms of (i) this Order, (ii) the Final Order, and (iii) that certain Terms and Conditions of Proposed Senior Secured, Super-Priority Debtor-in-Possession

1 The Debtors in the above-captioned chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are Hooper Holmes, Inc. (9359), Hooper Wellness, LLC (6005), Accountable Health Solutions, LLC (9625), Hooper Distribution Services, LLC (6838), Hooper Information Services, Inc. (4927), Hooper Kit Services, LLC (8378), and Provant Health Solutions, LLC (8511). The location of the Debtors’ corporate headquarters is 560 N. Rogers Rd., Olathe, Kansas 66286. 2 Capitalized terms used and not defined have the meanings given to such terms elsewhere in the Motion or the DIP Loan Agreements attached hereto.

In re:

HOOPER HOLMES, INC., et al.

Debtors.1

))))))))

Chapter 11

Case No. 18-23302 (RDD)

Jointly Administered


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Credit Facility, by and among the Debtors and SWK Funding LLC (the “SWK DIP Term Sheet” and collectively, with this Order and the Final Order, the “DIP Term Financing Documents”);

(2) the grant to each of (i) SWK Funding LLC (the “DIP Term Agent”) for itself and each

of the lenders under the DIP Term Financing Documents (the “DIP Term Lenders”, and collectively, with the DIP Term Agent, the “DIP Term Secured Parties”), and (ii) CNH Finance Fund I, L.P., as lender (referred to herein for convenience only as the “DIP Revolving Agent”, and collectively, with the DIP Term Agent, the “DIP Agents”) for itself as lender under the DIP Revolving Financing Documents (the “DIP Revolving Lender”, and, together with any other lenders under the DIP Revolving Credit Agreement from time to time, the “DIP Revolving Secured Parties”), of:

(a) superpriority administrative claim status pursuant to sections 364(c)(1) and

507(b) of the Bankruptcy Code in accordance with the terms of this Order; and (b) senior, secured, and priming liens upon the DIP Collateral (as defined herein)

in accordance with the terms of this Order; (3) authorization for the Debtors’ use of cash collateral whenever or wherever acquired,

and the proceeds of all collateral pledged to the Prepetition Term Secured Parties (as defined below) and Prepetition Revolving Secured Parties (as defined below), as contemplated by section 363 of the Bankruptcy Code in accordance with the terms set forth herein;

(4) a grant of adequate protection to the Prepetition Term Secured Parties and Prepetition

Revolving Secured Parties (as defined below) in accordance with the terms set forth herein; (5) modification of the automatic stay to the extent hereinafter set forth and waiving the

fourteen (14) day stay provisions of Federal Rule of Bankruptcy Procedure 4001(a)(3) and 6004(h); and

(6) a final hearing setting for the Motion for entry of an order authorizing the DIP

Revolving Facility, DIP Term Facility, and use of cash collateral on a final basis. Notice of the Motion, the relief requested therein, and the Interim Hearing (as defined

below) (the “Notice”) having been served by the Debtors in accordance with Rule 4001(c) on: (i) the DIP Term Agent, DIP Term Lenders, DIP Revolving Agent, DIP Revolving Lender, the Prepetition Term Secured Parties, and the Prepetition Revolving Secured Parties; (ii) the United States Trustee for the Southern District of New York (the “U.S. Trustee”); (iii) the holders of the thirty (30) largest unsecured claims against the Debtors’ estates; (iv) all parties known to the Debtors who hold any liens or security interest in the Debtors’ assets who have filed UCC-1 financing statements against the Debtor, or who, to the Debtors’ knowledge, have asserted any liens on any of the Debtors’ assets; (v) the Internal Revenue Service; (vi) the United States Securities and Exchange Commission; (vii) the United States Attorney’s Office for the Southern District of New York; and (viii) any party that has requested notice pursuant to Bankruptcy Rule 2002.


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The Court held an interim hearing with respect to the Motion on August 28, 2018 (the

“Interim Hearing”).

After the Motion and the proceedings before the Court at the Interim Hearing; and all

objections, if any, to the interim relief requested in the Motion having been withdrawn, resolved

or overruled by the Court as reflected on the record established by the Debtors at the Interim

Hearing;

THE COURT HEREBY MAKES THE FOLLOWING FINDINGS OF FACT AND

CONCLUSIONS OF LAW:3

A. On August 27, 2018 (the “Petition Date”), the Debtors filed voluntary petitions

for relief pursuant to Chapter 11 of title 11, United States Code, 11 U.S.C. §§ 101-1532 (the

“Bankruptcy Code”);4

B. The Debtors are continuing in the management and operation of their business

pursuant to sections 1107 and 1108, and no trustee or examiner has been appointed;

C. The Debtors gave notice of the Motion pursuant requirements imposed by the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and the Local Rules of

Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the Southern

District of New York (the “Local Rules”);

D. The Court has core jurisdiction over the Debtors’ bankruptcy cases, the Motion,

and the parties and property affected by this Order pursuant to 28 U.S.C. §§ 157(b) and 1334,

and venue is proper before the Court pursuant to 28 U.S.C. §§ 1408 and 1409;

3 To the extent, any findings of fact constitute conclusions of law, they are adopted as such, and vice versa, pursuant to Fed. R. Bankr. P. 7052. 4 Unless otherwise noted, all statutory references are to the Bankruptcy Code.


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E. As of the date hereof, the United States Trustee has not yet appointed an official

committee of unsecured creditors in this case pursuant to section 1102 (a “Statutory

Committee”);

F. Each of the Debtors has admitted, represented and stipulated, without prejudice to

the rights of third parties or any Statutory Committee set forth in this Order, the following

(collectively, the “Stipulations”):

(1) As of the Petition Date, one or more of the Debtors was party to an

Amended and Restated Credit Agreement dated as of May 11, 2017 (such agreement, as

amended and existing immediately prior to the Petition Date, the “Prepetition Term

Credit Agreement”), an Amended and Restated Guarantee and Collateral Agreement,

dated as of May 11, 2017 (the “Prepetition Term Collateral Agreement”), and other

documents, instruments, and agreements delivered in connection with the Prepetition

Term Credit Agreement and Prepetition Term Collateral Agreement (such documents,

collectively with the Prepetition Term Credit Agreement and Prepetition Term Collateral

Agreement, the “Prepetition Term Loan Documents”) with SWK Funding LLC as agent

(in such capacity, the “Prepetition Term Agent”) and the other lenders party thereto, as

lenders (in such capacity, the “Prepetition Term Lenders” and together with the

Prepetition Term Agent, in such capacities, the “Prepetition Term Secured Parties”),

pursuant to which (a) each of the Debtors is indebted to the Prepetition Term Secured

Parties, without defense, counterclaim, recoupment or offset of any kind, in the

approximate non-contingent liquidated amount of not less than $18,717,772.95 as of

August 27, 2018, plus prepetition interest, fees, expenses, and other amounts arising in

respect of such obligations existing immediately prior to the Petition Date (such


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obligations, the “Prepetition Term Loan Obligations”), and (b) such Prepetition Term

Loan Obligations are (and were as of the Petition Date) secured by valid, enforceable,

properly perfected, and unavoidable liens on and security interests encumbering (the

“Prepetition Term Liens”) substantially all assets of the Debtors (the “Prepetition

Collateral”), which liens were subject only to any Prepetition Revolving Liens of the

Prepetition Revolving Secured Parties in the Revolving Loan Priority Collateral (as such

term is defined in the Intercreditor Agreement);

(2) As of the Petition Date, one or more of the Debtors was party to that

certain Credit and Security Agreement, dated as of April 29, 2016 (as amended from time

to time, the “Prepetition Revolving Credit Agreement”, and collectively with the Loan

Documents (as such term is defined in the Prepetition Revolving Credit Agreement), the

“Prepetition Revolving Loan Documents”) by and among the Debtors as borrowers and

CNH Finance Fund I, L.P., as lender (the “Prepetition Revolving Lender”, which is also

referred to herein for convenience only as the “Prepetition Revolving Agent”, and

collectively with and any other lenders party to the Prepetition Revolving Credit

Agreement as lenders from time to time, the “Prepetition Revolving Secured Parties”),

pursuant to which (a) each of the Debtors is indebted to the Prepetition Revolving

Secured Parties, without defense, counterclaim, recoupment or offset of any kind, in the

approximate non-contingent, liquidated amount of not less than $4,754,847.29 as of


respect of the Prepetition Revolving Loan Document obligations existing immediately

prior to the Petition Date (such obligations, the “Prepetition Revolving Loan

Obligations”), and (b) such Prepetition Revolving Loan Obligations are (and were as of


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the Petition Date) secured by valid, enforceable, properly perfected, and unavoidable

liens (the “Prepetition Revolving Liens”) on and security interests encumbering the

Prepetition Collateral, which liens were subject only to any Prepetition Term Liens of the

Prepetition Term Secured Parties in the Term Loan Priority Collateral (as such term is

defined in the Intercreditor Agreement);

(3) As of the Petition Date, the Prepetition Revolving Agent and the

Prepetition Term Agent are parties to an Intercreditor Agreement, dated as of April 29,

2016 (as amended, modified, and/or supplemented, the “Intercreditor Agreement”),

which, among other things, provides for the relative priority of the respective prepetition

liens and security interests of the Prepetition Revolving Secured Parties and the

Prepetition Term Secured Parties in the Prepetition Collateral, with the Prepetition

Revolving Secured Parties having priority over the Prepetition Term Secured Parties in

the Revolving Loan Priority Collateral (as such term is defined in the Intercreditor

Agreement) and the Prepetition Term Secured Parties having priority over the Prepetition

Revolving Secured Parties in the Term Loan Priority Collateral (as such term is defined

in the Intercreditor Agreement). The Debtors acknowledge the existence of the terms of

the Intercreditor Agreement;

(4) The DIP Term Secured Parties and DIP Revolving Secured Parties are

willing to provide postpetition financing to the Debtors through DIP Term Facility and

DIP Revolving Facility and the terms of the DIP Term Financing Documents and DIP

Revolving Financing Documents;

(5) The Prepetition Term Secured Parties consent to the Debtors’ use of the

Prepetition Collateral and cash collateral (as such term is defined in Bankruptcy Code


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section 363(a)) only upon the conditions contained in this Order and the DIP Term

Financing Documents;

(6) The Prepetition Revolving Secured Parties consent to the Debtors’ use of

the Prepetition Collateral and cash collateral (as such term is defined in Bankruptcy Code

section 363(a)) only upon the conditions contained in this Order and the DIP Revolving


(7) No Debtor possesses any claims, offsets, or other rights or causes of action

against the Prepetition Term Secured Parties that would in any manner impair, reduce or

otherwise modify the Prepetition Term Loan Obligations or the validly perfected

Prepetition Term Liens upon the Prepetition Collateral;


against the Prepetition Revolving Secured Parties that would in any manner impair,

reduce or otherwise modify the Prepetition Revolving Loan Obligations or the validly

perfected Prepetition Revolving Liens upon the Prepetition Collateral;

(9) The Prepetition Term Loan Obligations constitute valid, binding

obligations of each Debtor, enforceable in accordance with their terms, and none of the

Debtors will assert any claims, counterclaims, setoffs, or defenses of any kind or nature,

which in any way would affect the validity and enforceability of any of the Prepetition

Term Loan Obligations and/or the security interests liens of the Prepetition Term Secured

Parties upon the Prepetition Collateral, or which would in any way reduce the obligation

of any Debtor to pay in full all of the Prepetition Term Loan Obligations;

(10) No portion of the Prepetition Term Loan Obligations or any payments

made to any or all of the Prepetition Term Loan Secured Parties are subject to avoidance,


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disallowance, disgorgement, recharacterization, recovery, subordination, attack, offset,

counterclaim, defense, or “claim” (as defined in the Bankruptcy Code) of any kind

pursuant to the Bankruptcy Code or applicable non-bankruptcy law;

(11) The Prepetition Revolving Loan Obligations constitute valid, binding




Revolving Loan Obligations and/or the security interests liens of the Prepetition

Revolving Secured Parties upon the Prepetition Collateral, or which would in any way

reduce the obligation of any Debtor to pay in full all of the Prepetition Revolving Loan

Obligations;

(12) No portion of the Prepetition Revolving Loan Obligations or any

payments made to any or all of the Prepetition Revolving Loan Secured Parties are

subject to avoidance, disallowance, disgorgement, recharacterization, recovery,

subordination, attack, offset, counterclaim, defense, or “claim” (as defined in the

Bankruptcy Code) of any kind pursuant to the Bankruptcy Code or applicable non-

bankruptcy law.

(13) All of the Debtors’ cash, including any cash in deposit accounts of the

Debtors, wherever located, constitutes Cash Collateral.

(14) The Debtors reasonably and in good faith believe that the use of Cash

Collateral and the loans, advances, and other financial accommodations to be obtained

pursuant to the DIP Revolving Facility and DIP Term Facility are sufficient to fund all

projected legitimate and allowable expenses of the Debtors’ Chapter 11 cases from the


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Petition Date during the period to which the Budget (as approved by the DIP Term Agent

and DIP Revolving Agent) pertains; and

(15) Each of the Debtors is a duly organized, validly existing limited liability

company or corporation and has the requisite power and authority to own, lease, and

operate its property, including, without limitation, the DIP Collateral. Each of the

Debtors has the requisite power and authority to enter into, execute, deliver, and perform

its obligations under the DIP Term Financing Documents, DIP Revolving Financing

Documents, and this Order and to incur the obligations provided for thereon. Except as

may be explicitly required in the DIP Term Financing Documents or DIP Revolving

Financing Documents, no consent or waiver of, filing with, authorization, approval or

other action by any shareholder, any federal, state, or other governmental authority or

regulatory body or any other person or entity (other than the DIP Term Secured Parties or

DIP Revolving Secured Parties), which has not already been obtained or done, is required

in connection with the execution, delivery and performance by any Debtor of any of the

documents required as a condition to the validity or enforceability of the DIP Term

Financing Documents or DIP Revolving Financing Documents, other than entry by this

Court of this Order;

G. The Debtors are unable to obtain sufficient levels of unsecured credit allowable

under section 503(b)(1) as an administrative expense necessary to maintain and conduct its

business;

H. The Debtors are unable to obtain secured credit from any source except from the

DIP Term Secured Parties and the DIP Revolving Secured Parties under the terms and conditions

provided in this Order;


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I. All cash of the Debtors, wherever located on the Petition Date, represents (i)

proceeds of loans or other financial accommodations provided to the Debtors by either (x) the

Prepetition Term Secured Parties under Prepetition Term Loan Documents; or (y) Prepetition

Revolving Secured Parties under the Prepetition Revolving Loan Documents; or (ii) proceeds of

Prepetition Collateral. Such funds (the “Cash Collateral”) constitute cash collateral within the

meaning of section 363;

J. It is in the best interest of the Debtors’ estate that the Debtors be allowed to enter

into the DIP Term Facility and DIP Revolving Facility in order to obtain postpetition secured

financing from the DIP Term Secured Parties and DIP Revolving Secured Parties, and use the

Prepetition Collateral and Cash Collateral subject to and in accordance with the terms of this

Order, the DIP Term Financing Documents, and the DIP Revolving Financing Documents, and

to grant adequate protection to the Prepetition Term Secured Parties and Prepetition Revolving

Secured Parties on account of the Debtors’ respective Prepetition Term Loan Obligations and

Prepetition Revolving Loan Obligations, on an interim basis under the terms and conditions set

forth herein and in the DIP Term Financing Documents and DIP Revolving Financing

Documents, as such is necessary to avoid immediate and irreparable harm to the Debtors’ estates

pending the Final Hearing;

K. The Debtors believe that the extension of credit and financial accommodations

under the DIP Term Facility, DIP Revolving Facility, DIP Term Financing Documents, and DIP

Revolving Financing Documents are fair, reasonable, in good faith, negotiated at arm’s length,

reflect the Debtors’ exercise of prudent business judgment, and are supported by reasonably

equivalent value and fair consideration and the DIP Term Secured Parties and DIP Revolving

Secured Parties are entitled to the protections of section 364(e);


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L. The Debtors require access to the funding available under the DIP Term Facility,

DIP Revolving Facility, DIP Term Financing Documents, and the DIP Revolving Financing

Documents in order to satisfy administrative expenses associated with the operation of the

Debtors’ business as a going concern and other costs relating to the administration of these

chapter 11 cases, and in order to avoid immediate and irreparable harm to the Debtors’ estates


M. The Prepetition Term Secured Parties and Prepetition Revolving Secured Parties

are unwilling to consent to use of the Prepetition Collateral by the Debtors, except under the

terms of the DIP Term Financing Documents, DIP Revolving Financing Documents, and this

Order assuring that the liens and the various claims, superpriority claims, and other protections

granted in this Order will not be affected by any subsequent reversal or modification of this

Order or any other order, as provided in section 364(e), which is applicable to the postpetition

financing arrangement contemplated in the DIP Term Financing Documents, DIP Revolving

Financing Documents, and the use of Cash Collateral contemplated this Order; and

N. Good and sufficient cause exists for the issuance of this Order, to prevent

immediate and irreparable harm to the Debtors’ estates.

Based upon the foregoing, and after due consideration and good cause appearing therefor;

IT IS HEREBY ORDERED, ADJUDGED AND DECREED that:

1. The Motion is granted on an interim basis effective as of the Petition Date. The

Debtors are authorized, pursuant to sections 363 and 364, to enter into the DIP Term Facility,

DIP Term Financing Documents, DIP Revolving Facility, and DIP Revolving Facility

Documents, to execute such other and additional documents necessary or desired to implement

the DIP Term Facility, DIP Term Financing Documents, DIP Revolving Facility, or DIP

Revolving Facility Documents, to obtain postpetition secured financing from the DIP Term


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Secured Parties and DIP Revolving Secured Parties, and to use the Prepetition Collateral, Cash

Collateral, and the proceeds and products thereof, pursuant to the terms and conditions of the

DIP Term Financing Documents, DIP Revolving Financing Documents, and this Order to avoid

immediate and irreparable harm to the Debtors’ estates pending the Final Hearing. The Debtors

shall use the advances obtained under the DIP Term Facility, the advances obtained under the

DIP Revolving Facility, and the DIP Collateral (including Cash Collateral) only for the purposes

and in the amounts set forth herein, in the DIP Term Financing Documents, the DIP Revolving

Financing Documents, and the budget attached hereto as Exhibit 1 (the “Budget”), subject to the

terms and conditions therein. Neither the DIP Term Secured Parties or DIP Revolving Secured

Parties shall have any obligation to make any DIP Term Facility or DIP Revolving Facility

advances (as applicable) in excess of the amounts and times set forth in the Budget and

applicable DIP Term Financing Documents and DIP Revolving Financing Documents.

2. With respect to the Budget:

(a) The Debtors’ actual total cash receipts and disbursements from operations line

items, other than fees and expenses of third party professionals engaged by or for the benefit of

the Debtors or their estates (such fees, “Professional Fees”), shall each be adhered to on a weekly

period basis and a cumulative basis for the Budget period then ending, subject to the Budget

Variances described below (provided, however, that amounts not disbursed in a line item shall be

deemed to roll over to subsequent weeks);

(b) Actual total cash receipts and cash disbursement from operations line items

(which shall not and do not include Professional Fees) shall not vary unfavorably (including any

amounts deemed to roll over from a previous week due to not being spent) by (i) more than ten

percent (10%) per line item on a weekly basis; or (iii) ten percent (10%) per line item on a


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cumulative basis for that portion of the Budget period then ended (such variances, the “Budget

Variances”);

(c) For all Professional Fees within the Budget, other than the professional fees of

the DIP Term Secured Parties or DIP Revolving Secured Parties (which shall not be limited by

the Budget, but shall be subject to the terms of paragraph 6 herein), the Debtors shall not allow

actual disbursements for each Professional Fee line item (and for the avoidance of doubt, each

professional receiving Professional Fees shall be reflected on its own line item) to be more than

the budgeted disbursements for such Professional Fee line item during the cumulative period

from the Petition Date to the end of the applicable current weekly Budget period.

3. No proceeds of the DIP Term Facility, DIP Revolving Facility, or Cash Collateral

shall be used to:

A. Permit the Debtors or any other party-in-interest to institute any

proceeding to determine (i) the validity, perfection, or priority of any security interests in

favor of the Prepetition Revolving Secured Parties, the Prepetition Term Secured Parties,

the DIP Revolving Secured Parties, or the DIP Term Secured Parties or (ii) the

enforceability of any of the Debtors’ obligations under, or the obligations of any

guarantor under, the Prepetition Revolving Loan Documents, Prepetition Term Loan

Documents, DIP Revolving Financing Documents, or DIP Term Financing Documents;

B. Investigate, commence, prosecute or defend (or support any other person

or entity in investigating, commencing, prosecuting or defending) any claim, motion,

proceeding or cause of action against the Prepetition Revolving Secured Parties, the

Prepetition Term Secured Parties, the DIP Revolving Secured Parties, or the DIP Term

Secured Parties or any of their agents, attorneys, advisors or representatives, including,


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without limitation, claims or causes of action relating to lender liability or subordination

claims;

C. Investigate, commence, prosecute, or defend (or support any other person

or entity in investigating, commencing, prosecuting, or defending) any claim or

proceeding or cause of action to disallow or challenge the obligations of any Debtor or

guarantor under the Prepetition Revolving Loan Documents, the Prepetition Term Loan

Documents, the DIP Revolving Financing Documents, or the DIP Term Financing

Documents; provided, however, that a Statutory Committee (if any) and its professionals

shall be allowed to use proceeds of the DIP Revolving Facility, DIP Term Facility, or

Cash Collateral in a collective amount not to exceed ten thousand dollars ($25,000) to

investigate the validity of the Prepetition Term Liens and Prepetition Revolving Liens

(the “Committee Budget”); or

D. Fund any acquisitions, capital expenditures, capital leases, or similar

expenditures other than those specifically set forth in the Budget.

4. Pursuant to sections 363 and 364(c) and (d):

A. The DIP Term Facility funds advanced pursuant to the terms of this Order

(collectively, the “Interim DIP Term Advances”) shall be allowed administrative

expenses of each Debtor’s estate, which shall have priority in payment over any other

indebtedness and/or obligations now in existence or incurred hereafter by any Debtor and

over all administrative expenses or charges against property arising in each Debtor’s

Chapter 11 case and any superseding Chapter 7 case including, without limitation, those

specified in Bankruptcy Code sections 105, 326, 328, 330, 331, 503(b), 506(c) (subject to

the entry of the Final Order), 507(a), 507(b), 1113 or 1114, subject and junior only to the


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Carve-Out (as hereinafter defined), but pari-passu with the DIP Revolving Superpriority

Claim (as defined below) (such claim, the “DIP Term Superpriority Claim”).

B. The DIP Revolving Facility funds advanced pursuant to the terms of this

Order (collectively, the “Interim DIP Revolving Advances” and collectively, with the

Interim DIP Term Advances, the “Interim DIP Advances”) shall be allowed

administrative expenses of each Debtor’s estate, which shall have priority in payment

over any other indebtedness and/or obligations now in existence or incurred hereafter by

any Debtor and over all administrative expenses or charges against property arising in

each Debtor’s Chapter 11 case and any superseding Chapter 7 case including, without

limitation, those specified in Bankruptcy Code sections 105, 326, 328, 330, 331, 503(b),

506(c) (subject to the entry of the Final Order), 507(a), 507(b), 1113 or 1114, subject and

junior only to the Carve-Out (as hereinafter defined), but pari-passu with the DIP Term

Superpriority Claim (such claim, the “DIP Revolving Superpriority Claim”, and

collectively, with the DIP Term Superpriority Claim, the “DIP Superpriority Claims”).

C. The time of payment of the Interim DIP Advances shall not be altered,

extended or impaired by any plan or plans of reorganization that may hereafter be

accepted or confirmed or any further orders of the Court which hereafter may be entered.

5. To the extent permitted by the Bankruptcy Code:

A. Interest on the Prepetition Term Loan Obligations shall accrue from and

after the Petition Date at the rate set forth in the Prepetition Term Loan Documents and

be payable along with interest accruing on the Interim DIP Term Advances, as set forth in

the Budget and the DIP Term Financing Documents.


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B. Interest on the Prepetition Revolving Loan Obligations shall accrue from

and after the Petition Date at the rate set forth in the Prepetition Revolving Loan

Documents and be payable along with interest accruing on the Interim DIP Revolving

Advances, as set forth in the Budget and the DIP Revolving Financing Documents.

6. The reasonable fees and expenses of the DIP Term Secured Parties and DIP

Revolving Secured Parties, whether incurred before or after the Petition Date, shall be payable as

set forth in the applicable DIP Term Financing Documents or DIP Revolving Financing

Documents, without further notice, motion, or application to, order of, or hearing before, the

Court (except such notice as may be required in the applicable DIP Financing Documents);

provided, however, any DIP Term Secured Party or DIP Revolving Secured Party submitting

requests for reimbursement shall submit statements of its professionals’ fees (with time and

expense detail included) to the Debtors, the U.S. Trustee, and counsel for any Statutory

Committee and such parties shall have fourteen (14) days following the receipt of such

statements to object to the reasonableness of the fees and expenses included in any such invoices.

If no objection is received within such fourteen (14) day period, the Debtors are authorized to

pay the fees and expenses requested, without further notice or Court order. Although fees

incurred by professionals retained by the DIP Term Secured Parties and DIP Revolving Secured

Parties are not limited by the Budget: (i) No DIP Term Facility advances shall be used to pay any

fees, costs, or expenses of professionals of the DIP Revolving Secured Parties in excess of the

amounts set for such professionals set forth in the Budget; and (ii) No DIP Revolving Facility

advances shall be used to pay any fees, costs, or expenses of professionals of the DIP Term

Secured Parties in excess of the amounts set forth for such professionals set forth in the Budget.

7. Subject to entry of the Final Order:


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A. All Prepetition Term Loan Obligations relating to advances made under

the Prepetition Term Loan Documents from and after the fifth amendment of the

Prepetition Term Credit Agreement (dated May 31, 2018) shall become DIP Term

Facility obligations under the DIP Term Financing Documents.

B. All Prepetition Revolving Loan Obligations relating to advances made

under the Prepetition Revolving Loan Documents shall become DIP Revolving Facility

obligations under the DIP Revolving Financing Documents.

8. Pursuant to sections 363, 364(c), and 364(d), as security for the Interim DIP

Advances and other postpetition costs payable under the DIP Revolving Financing Documents

and DIP Term Financing Documents, the Debtors are hereby authorized to and are hereby

deemed to grant to:

A. The DIP Term Agent a valid, binding and enforceable lien, mortgage

and/or security interest (a “Lien,” and as so granted to the DIP Term Agent, the “DIP

Term Lien”) in all of the Debtors’ presently owned or hereafter acquired property and

assets, whether such property and assets were acquired before or after the Petition Date,

of any kind or nature, whether real or personal, tangible or intangible, wherever located,

and the proceeds and products thereof (collectively, the “DIP Collateral”), but excluding

any causes of action that could be brought pursuant to sections 544, 545, 547 and 548 of

the Bankruptcy Code, or any applicable state fraudulent transfer statutes (the “Avoidance

Actions”), but, subject to entry of the Final Order, including proceeds of (and any

property received in respect of) Avoidance Actions (such proceeds, “Avoidance

Proceeds”); and


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B. The DIP Revolving Agent a valid, binding and enforceable Lien (as so

granted to the DIP Revolving Agent, the “DIP Revolving Lien”) in all of the DIP

Collateral, but excluding any Avoidance Actions, but, subject to entry of the Final Order,

including Avoidance Proceeds.

9. Pursuant to sections 364(c) and (d):

A. The DIP Term Lien shall be a first priority senior and priming lien on the

DIP Collateral, subject and junior only to:

(1) With respect to DIP Collateral constituting Term Loan Priority

Collateral (such term is used herein throughout as it is defined in the Intercreditor

Agreement), (a) the Carve-Out, and (b) valid, enforceable, properly perfected, and

unavoidable prepetition Liens (including any Liens that are perfected after the

Petition Date that are afforded priority due to the express relation back of the

perfection of such lien to a date prior to the Petition Date as permitted by

Bankruptcy Code section 546(b)) that are senior to both the Prepetition Term

Liens and Prepetition Revolving Liens (“Senior Third Party Liens”),

(2) With respect to DIP Collateral constituting Revolving Loan

Priority Collateral (such term is used herein throughout as it is defined in the

Intercreditor Agreement), (a) the Carve-Out, (b) Senior Third Party Liens, and (c)

the DIP Revolving Liens, Prepetition Revolving Liens, and the Revolving

Adequate Protection Liens (as such term is defined below).

(3) With respect to any DIP Collateral that would not fit within the

definition of Revolving Loan Priority Collateral or Term Loan Priority Collateral,

and was not or could not have been subject to a lien prior to the Petition Date


- 19 -

securing the Prepetition Revolving Loan Obligations or Prepetition Term Loan

Obligations (such DIP collateral defined in this subsection (3), the “New DIP

Collateral”), (a) the Carve-Out, but pari-passu with any liens of the DIP

Revolving Agent upon such New DIP Collateral.

B. The DIP Revolving Lien shall be a first priority senior and priming lien on

the DIP Collateral, subject and junior only to:


Priority Collateral, (a) the Carve-Out, and (b) Senior Third Party Liens,


Collateral, (a) the Carve-Out, (b) Senior Third Party Liens, and (c) the DIP Term

Liens, the Prepetition Term Liens, and the Term Loan Adequate Protection Liens

(as such term is defined below).

(3) With respect to any New DIP Collateral, subject to the Carve-Out,

but pari-passu with any liens of the DIP Term Agent upon such New DIP

Collateral.

C. Subject only to the provisions set forth in the foregoing paragraph 9 hereof

(the “DIP Priority Provisions”), neither the DIP Revolving Lien nor DIP Term Lien shall

be subject or subordinate to any Lien which is avoided and which would otherwise be

preserved for the benefit of any Debtor’s estate under section 551.

D. In no event shall any person or entity who pays (or causes to be paid) any

of the obligations under the Prepetition Term Loan Documents be subrogated, in whole

or in part, to any rights, remedies, claims, privileges, liens or security interests granted to

or in favor of, or conferred upon, the DIP Term Secured Parties by the terms of the DIP


- 20 -

Term Financing Documents or applicable law until such time as the obligations under the

DIP Term Financing Documents and this Order are indefeasibly paid in full, in cash. The

DIP Term Lien shall not be subject or subordinate to Liens arising after the Petition Date,

other than Liens granted pursuant to this Order to the extent set forth in this Order.

E. In no event shall any person or entity who pays (or causes to be paid) any

of the obligations under the Prepetition Revolving Loan Documents be subrogated, in

whole or in part, to any rights, remedies, claims, privileges, liens or security interests

granted to or in favor of, or conferred upon, the DIP Revolving Secured Parties by the

terms of the DIP Revolving Financing Documents or applicable law until such time as the

obligations under the DIP Revolving Financing Documents and this Order are

indefeasibly paid in full, in cash. The DIP Revolving Lien shall not be subject or

subordinate to Liens arising after the Petition Date, other than Liens granted pursuant to

this Order to the extent set forth in this Order.

10. All rents, income, profits, cash, cash in accounts and deposits derived from the

Prepetition Collateral constitute Cash Collateral. Provided that each of the conditions set forth in

this Paragraph are satisfied, the Debtors shall be authorized to use the Cash Collateral only in

accordance with the terms of the Budget, this Order, the DIP Term Financing Documents, and

the DIP Revolving Financing Documents. The satisfaction of each of the following conditions

shall constitute a condition to the Debtors’ authorization to use any Cash Collateral: (i) no Event

of Default under the DIP Term Financing Documents or DIP Revolving Financing Documents

shall exist or be continuing; and (ii) a Termination Event (as defined below) shall not have

occurred. If, on any date, any of such conditions is not satisfied, then the Debtors shall not be

authorized to use any Cash Collateral unless and until such use is consented to in writing by both


- 21 -

the DIP Term Agent and DIP Revolving Agent in their sole and absolute discretion. Absent

further order of the Court, if a Termination Event occurs, then the Debtors shall remit to the DIP

Revolving Agent or DIP Term Agent (as applicable), subject to payment of the Carve-Out, any

Cash Collateral then in the Debtors’ possession for application to the DIP Term Facility

obligations, DIP Revolving Facility obligations, Prepetition Term Loan Obligations, and

Prepetition Revolving Loan Obligations consistent with the DIP Priority Provisions.

11. Until the indefeasible payment in full of the Prepetition Term Loan Obligations,

the Prepetition Term Secured Parties are entitled to adequate protection of their interests in the

Prepetition Collateral (including Cash Collateral) as a result of (a) the provisions of this Order

granting first priority and/or priming liens on such Prepetition Collateral to the DIP Term Agent

and DIP Revolving Agent for the benefit of the DIP Term Secured Parties and DIP Revolving

Secured Parties, (b) the Debtors’ use of the Prepetition Collateral (including Cash Collateral), (c)

the imposition of the automatic stay pursuant to section 362 of the Bankruptcy Code, or (d)

otherwise, pursuant to sections 361(a), 363(c), and 364(d)(1) of the Bankruptcy Code. The

Prepetition Term Agent, on behalf of and for the benefit of the Prepetition Term Secured Parties,

is hereby granted, solely to the extent of diminution in value of the Prepetition Term Liens in the

Prepetition Collateral from and after the Petition Date, the following:

A. A Lien in all DIP Collateral (the “Term Adequate Protection Lien”)

subject and junior only to:


Collateral, (a) the Carve-Out, (b) the DIP Term Lien, and (c) Senior Third Party

Liens,


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Priority Collateral, (a) the Carve-Out, (b) the DIP Revolving Lien, (c) the DIP

Term Lien, (d) Senior Third Party Liens, and (e) the Prepetition Revolving Liens

and the Revolving Adequate Protection Liens (as such term is defined below).

(3) With respect to any DIP Collateral that constitutes New DIP

Collateral, (a) the Carve-Out, (b) the DIP Term Lien, and (c) the DIP Revolving

Lien, but pari-passu with any Revolving Adequate Protection Liens upon such

New DIP Collateral.

B. A postpetition superpriority administrative expense claim (the “Term

Adequate Protection Claim”) against each Debtor with recourse to all prepetition and

postpetition property of each Debtor and all proceeds thereof under sections 503 and 507

of the Bankruptcy Code against each Debtor’s estate to the extent the Term Adequate

Protection Lien does not adequately protect against the diminution in value of the

Prepetition Term Liens, which shall have priority in payment over any and all other

administrative expenses of any kind, including, without limitation, those specified in

sections 105, 326, 328, 330, 331, 503(b), 506(c) (subject to entry of the Final Order),

507(a), 507(b), 1113, or 1114 of the Bankruptcy Code, or otherwise and including those

resulting from the conversion of the chapter 11 case pursuant to section 1112 of the

Bankruptcy Code; subject and junior only to the Carve-Out and the Interim DIP

Advances, provided, however, that the Term Adequate Protection Claim shall be pari-

passu with the Revolving Adequate Protection Claim.

C. Without duplication of any amounts required to be paid pursuant to the

DIP Term Financing Documents, the Debtors shall pay in cash all reasonable and


- 23 -

documented out-of-pocket expenses incurred by counsel and advisors to the Prepetition

Term Agent (including, without limitation, reasonable attorneys’ fees incurred by the

Prepetition Term Agent’s counsel) relating to the Debtors or their restructuring, whether

incurred before, on, or after the Petition Date.

12. Until the indefeasible payment in full of the Prepetition Revolving Loan

Obligations, the Prepetition Revolving Secured Parties are entitled to adequate protection of their

interests in the Prepetition Collateral (including Cash Collateral) as a result of (a) the provisions

of this Order granting first priority and/or priming liens on such Prepetition Collateral to the DIP

Term Agent and DIP Revolving Agent for the benefit of the DIP Term Secured Parties and DIP

Revolving Secured Parties, (b) the Debtors’ use of the Prepetition Collateral (including Cash

Collateral), (c) the imposition of the automatic stay pursuant to section 362 of the Bankruptcy

Code, or (d) otherwise, pursuant to sections 361(a), 363(c), and 364(d)(1) of the Bankruptcy

Code. The Prepetition Revolving Agent, on behalf of and for the benefit of the Prepetition

Revolving Secured Parties, is hereby granted, solely to the extent of diminution in value of the

Prepetition Revolving Liens in the Prepetition Collateral from and after the Petition Date, the

following:

A. A Lien in all DIP Collateral (the “Revolving Adequate Protection Lien”)

junior only to:


Priority Collateral, (a) the Carve-Out, (b) the DIP Revolving Lien, and (c) Senior

Third Party Liens,


Collateral, (a) the Carve-Out, (b) the DIP Revolving Lien, (c) the DIP Term Lien,


- 24 -

(d) Senior Third Party Liens, and (e) the Prepetition Term Liens and the Term




Lien, but pari-passu with any Term Adequate Protection Liens upon such New

DIP Collateral.

B. A postpetition superpriority administrative expense claim (the “Revolving



of the Bankruptcy Code against each Debtor’s estate to the extent the Revolving

Adequate Protection Lien does not adequately protect against the diminution in value of

the Prepetition Revolving Liens, which shall have priority in payment over any and all

other administrative expenses of any kind, including, without limitation, those specified

in sections 105, 326, 328, 330, 331, 503(b), 506(c) (subject to entry of the Final Order),




Advances, provided, however, that the Revolving Adequate Protection Claim shall be

pari-passu with the Term Adequate Protection Claim.


DIP Revolving Financing Documents, the Debtors shall pay in cash all reasonable and


Revolving Agent (including, without limitation, reasonable attorneys’ fees incurred by


- 25 -

the Prepetition Revolving Agent’s counsel) relating to the Debtors or their restructuring,

whether incurred before, on, or after the Petition Date.

D. Pursuant to the Prepetition Revolving Loan Documents, on and after the

Petition Date, the Debtors shall maintain their cash management system as required under

Section 2.5 of the Prepetition Revolving Credit Agreement, pursuant to which all

accounts receivable and other funds received by Debtors are paid into the Lockbox

Accounts (as defined in the Prepetition Revolving Credit Agreement), swept daily into

the Concentration Account (as defined in the Prepetition Revolving Credit Agreement)

and applied to satisfy interest payment and other obligations owed to the Prepetition

Revolving Lender under the Prepetition Revolving Loan Documents. All such

applications of funds by a Prepetition Revolving Secured Party shall be consistent with

the DIP Priority Provisions.

13. Nothing herein shall be deemed to be a waiver by any Prepetition Revolving

Secured Party or any Prepetition Term Secured Party of its right to request additional or further

protection of its interests in any property of the Debtors, to move for relief from the automatic

stay (if such relief is required), to seek the appointment of a trustee or examiner or the dismissal

of any of the Debtors’ bankruptcy cases, or to request any other relief.

14. The automatic stay provisions of section 362 are hereby modified to permit (a) the

Debtors, the DIP Revolving Secured Parties, and the DIP Term Secured Parties to implement and

perform the DIP Term Facility, DIP Term Financing Documents, DIP Revolving Facility, and

the DIP Revolving Financing Documents, including without limitation the provisions thereof

with respect to the collection of proceeds, and (b) the creation and perfection of all Liens granted

or permitted by this Order. The Debtors and the holders of any DIP Term Lien, DIP Revolving


- 26 -

Lien, Term Adequate Protection Lien, or Revolving Adequate Protection Lien, shall not be

required to enter into any additional security agreements to create, memorialize, and/or perfect

any such Liens, or to file UCC financing statements, mortgages, or other instruments with any

other filing authority or take any other action to perfect any such Liens, which shall be and are

deemed valid, binding, enforceable and automatically perfected by the docket entry of this Order

by the Clerk of the Court. If, however, the holder of any DIP Term Lien, DIP Revolving Lien,

Term Adequate Protection Lien, or Revolving Adequate Protection Lien in its sole and absolute

discretion shall elect for any reason to enter into, file, record or serve any such financing

statements or other documents with respect to any such Lien, then the Debtors shall execute the

same upon request and the filing, recording or service thereof (as the case may be) shall be

deemed to have been made at the time and on the date of the docket entry of this Order by the

Clerk of the Court. The holders of any DIP Term Lien, DIP Revolving Lien, Prepetition

Revolving Lien, Prepetition Term Lien, Revolving Adequate Protection Lien, Term Adequate

Protection Lien, Prepetition Term Loan Obligations, and Prepetition Revolving Loan Obligations

are hereby relieved of any requirement to file proofs of claim in the Debtors’ bankruptcy cases

with respect to any such Liens or the claims secured thereby, but any such holder may in its sole

and absolute discretion file any such proof of claim.

15. The DIP Term Lien, DIP Revolving Lien, Term Adequate Protection Lien,

Revolving Adequate Protection Lien, Term Adequate Protection Claim, and Revolving Loan

Adequate Protection Claim, shall be subject to right of payment of the following expenses (the

following subparagraphs, collectively, the “Carve-Out,” and all amounts payable in connection

therewith, the “Carve-Out Amounts”):


- 27 -

A. Unpaid postpetition fees and expenses of the Clerk of the Court and the

U.S. Trustee pursuant to 28 U.S.C. § 1930, plus applicable interest, if any;

B. Unpaid postpetition fees and expenses of professionals of the Debtors and

professionals of a Statutory Committee (if any), which are retained by an order of the

Court pursuant to sections 327, 328, 363 or 1103(a) of the Bankruptcy Code (the

“Professionals”), but only to the extent such fees and expenses are (i) incurred prior to a

Termination Event, (ii) within the amounts set forth in the Budget approved by the DIP

Term Agent and DIP Revolving Agent, provided, however, that any amount of fees paid

from a retainer held by a professional shall be in addition to, and shall not count against,

the amounts in the Budget for purposes of the “Carve-Out”, and (iii) subsequently

allowed by the Bankruptcy Court under sections 330, 331, or 363 of the Bankruptcy

Code; and

C. Postpetition fees and expenses of the Professionals incurred after a

Termination Event in an aggregate amount not to exceed $100,000, allocated (i) $75,000

to the Debtors’ Professionals and (ii) $25,000 to the any Statutory Committees’

Professionals, to the extent such fees and expenses are (i) subsequently allowed by the

Bankruptcy Court under sections 330, 331, or 363 of the Bankruptcy Code, and (ii) not

otherwise paid or payable from retainers (or other immediately available funds) or any

professional expense escrow account established by the Debtors;

D. Notwithstanding Paragraph 15.C, a “Transaction Fee” as defined and

payable pursuant to the terms of the engagement agreement between Debtors and

Raymond James & Associates, Inc., and as authorized by the Court’s order approving the


- 28 -

engagement and retention of Raymond James & Associates, Inc. as investment bankers to

the Debtors.

provided, however, that (a) the Carve-Out shall only be available to pay fees and expenses set

forth herein to the extent that unencumbered funds are not otherwise available; and (b) in no

event shall the Carve-Out funds be used to pay fee amounts for any Professional that exceed the

amounts for postpetition fees for such Professional set forth in the Budget as of the applicable

date of determination. Any amounts paid from the DIP Collateral or the proceeds thereof, or

funded by the DIP Term Agent, DIP Term Secured Parties, DIP Revolving Agent, or DIP

Revolving Secured Parties (as applicable) with respect to the Carve-Out prior to the entry of the

Final Order shall be Interim DIP Term Advances or Interim DIP Revolving Advances (as

applicable) and such obligations shall be secured by the DIP Term Lien or DIP Revolving Lien

(as applicable). Further, the payment of the fees or costs of any Professional and/or Statutory

Committee (if any) shall be subject to Court approval, and DIP Term Agent, DIP Term Secured

Parties, DIP Revolving Agent, and the DIP Revolving Secured Parties reserve the right to object

to any Professional’s application for payment. As used in this Order, the term “Termination

Event” shall mean the occurrence of the earlier of: (i) an event of default under the DIP Term

Facility, (ii) an event of default under the DIP Revolving Facility, (iii) the Debtors’ failure to

comply with the DIP Term Financing Documents, (iv) the Debtors’ failure to comply with the

terms of the DIP Revolving Financing Documents, or (v) the Debtors’ failure to comply with any

of the following milestones (the “Milestones”):

a. On the Petition Date or one calendar day thereafter, or such later date to which the DIP Term Agent and DIP Revolving Agent consent in writing in their sole discretion, the Debtors shall file a motion, in form and substance satisfactory to the DIP Agents, requesting entry of an order approving a sale of substantially all of their assets (the “Sale Order”) and an order approving procedures for conducting such sale (the “Sale Procedure Order”);


- 29 -

b. On or before the date that is twenty-five (25) days after the Petition Date, or such

later date to which the DIP Term Agent and DIP Revolving Agent consent in writing in their sole discretion, the Court shall have entered the Sale Procedure Order;

c. On or before the date that is forty-eight (48) days after the Petition Date, or such

later date to which the DIP Term Agent and DIP Revolving Agent consent in writing in their sole discretion, the Debtors have conducted an auction (if more than one bid is received) for the sale of substantially all of their assets;

d. On or before the date that is fifty (50) days after the Petition Date, or such later

date to which the DIP Term Agent and DIP Revolving Agent consent in writing in their sole discretion, the Court shall have entered the Sale Order and approved the sale of substantially all of the Debtors’ assets to the successful bidder;

e. On or before the date that is sixty (60) days after the Petition Date, or such later

date to which the DIP Term Agent and DIP Revolving Agent consent in writing in their sole discretion, the Debtors’ sale of substantially all of their assets shall have closed, with the proceeds of such sale being disbursed to the DIP Term Agent and DIP Revolving Agent in accordance with this Order.

16. Neither the payment of any Professional fees, nor the Carve-Out shall include

payment for any fees and expenses, if any, of the Professionals incurred directly or indirectly, in

respect of, arising from or relating to:

A. The initiation, joinder or prosecution of any action (or support of any other

person or entity initiating, joining, or prosecuting any action) contesting the indebtedness

owed to any of the DIP Term Secured Parties, the DIP Revolving Secured Parties, the

Prepetition Term Secured Parties, or the Prepetition Revolving Secured Parties, or the

validity of any liens granted to any of such parties, provided, however, that a Statutory

Committee (if any) and its professionals shall be allowed to use the Committee Budget to

investigate the validity of the Prepetition Term Liens and Prepetition Revolving Liens;

B. Preventing, hindering or otherwise delaying (or supporting any other

person or entity in preventing, hindering, or otherwise delaying), whether directly or

indirectly, the exercise by the DIP Term Agent, DIP Revolving Agent, Prepetition Term


- 30 -

Agent, or Prepetition Revolving Agent of any of its rights and remedies under the Interim

Order, Final Order, DIP Term Financing Documents, DIP Revolving Financing

Documents, Prepetition Term Loan Documents, or Prepetition Revolving Loan

Documents;

C. The commencement, support, or prosecution of any action or proceeding

(or support of any other person or entity in commencing or prosecuting) of any claims,

causes of action or defenses against the DIP Term Secured Parties, DIP Revolving

Secured Parties, Prepetition Term Secured Parties, Prepetition Revolving Secured Parties,

or any of their respective officers, directors, employees, agents, attorneys, affiliates,

successors or assigns, including, without limitation, any attempt to recover or avoid any

claim or interest from the DIP Term Secured Parties, DIP Revolving Secured Parties,

Prepetition Term Secured Parties, Prepetition Revolving Secured Parties, or any of them,

under Chapter 5 of the Bankruptcy Code;

D. Any request to borrow money other than pursuant to the terms of this

Order, the Final Order, the DIP Term Financing Documents, or the DIP Revolving


E. With respect to the Debtors, any of the Debtors’ Professionals, or any of

their successors or assigns (including, without limitation, any trustee, responsible officer,

examiner, estate administrator or representative, or similar person appointed in a case for

the Debtor under any chapter of the Bankruptcy Code) performing or commencing any

investigation or litigation (whether threatened or pending) by any Debtor with respect to

the Stipulations or any matter to be released, waived or specified as not subject to


- 31 -

challenge by the Debtors pursuant to this Order or the Final Order (including, without

limitation, Paragraphs 26, 27, and 28 herein).

17. Subject to the entry of the Final Order, effective as of the time of commencement

of the Debtors’ bankruptcy cases on the Petition Date:

A. The Debtors irrevocably waive all claims and rights, if any, that the

Debtors or their estates might otherwise assert against the Prepetition Collateral or DIP

Collateral pursuant to Bankruptcy Code sections 506(c), 105(a) or any other applicable

law;

B. Except from and pursuant to the terms of the Carve-Out, no entity in the

course of the Debtors’ bankruptcy cases shall be permitted to recover from the DIP

Collateral (whether directly or through the grant of derivative or equitable standing in the

name of any Debtor or any Debtor’s estate) any cost or expense of preservation or

disposition of the Prepetition Collateral or DIP Collateral, including, without limitation,

expenses and charges as provided in Bankruptcy Code sections 506(c), 105(a), or any

other applicable law;

C. Except from and pursuant to the terms of the Carve-Out, no entity shall be

permitted to recover from the DIP Collateral or Prepetition Collateral, or assert against

any DIP Term Secured Party, DIP Revolving Secured Party, Prepetition Term Secured

Party, or Prepetition Revolving Secured Party, any claim with respect to any unpaid

administrative expense of the Debtors’ bankruptcy cases, whether or not the Debtors’

payment of such administrative claim was contemplated by or included in the Budget;

and


- 32 -

D. The DIP Term Secured Parties, DIP Revolving Secured Parties,

Prepetition Term Secured Parties, and Prepetition Revolving Secured Party shall not be

subject to the “equities of the case” exception of Bankruptcy Code section 552(b), or to

the equitable doctrines of “marshaling” or any similar claim or doctrine, with respect to

any DIP Collateral or Prepetition Collateral.

18. So long as either the DIP Term Facility or DIP Revolving Facility obligations

remain outstanding, unless consented to in writing by the DIP Term Agent and DIP Revolving

Agent, the Debtors shall not seek entry of any further orders in the Debtors’ bankruptcy cases

that authorize (a) under section 363 of the Bankruptcy Code, the use of Cash Collateral; (b) the

obtaining of credit or the incurring of indebtedness pursuant to sections 364(c) or 364(d) of the

Bankruptcy Code that does not repay the DIP Term Facility and DIP Revolving Facility in full,

in cash, (c) the return of goods pursuant to section 546(h) of the Bankruptcy Code to any creditor

of the Debtors, (d) any creditor to setoff or reocoup against any of such creditor’s claims against

the Debtors, or (e) any other grant of rights against the Debtors and/or their estates that is secured

by a Lien in the DIP Collateral or is entitled to superpriority administrative status that does not

repay the DIP Term Facility and DIP Revolving Facility in full, in cash.

19. Upon the occurrence of: (i) an Event of Default (as such term is defined in the

SWK DIP Term Sheet) or an Event of Default (as such term is defined in the DIP Revolving

Credit Agreement); or (ii) the Debtors’ failure to comply with the terms of this Order or the Final

Order (including, without limitation, its failure to comply with the Budget, subject to any

approved variances); and the giving of written notice thereof by the DIP Term Agent or DIP

Revolving Agent (as applicable) to counsel to the Debtors, the Statutory Committee (if any),

counsel to the other DIP Agents, and the U.S. Trustee (which notice may be given by any


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manner of electronic transmission, the automatic stay being deemed lifted for such purpose) (the

“Default Notice”), then (i) the DIP Term Agent shall be fully authorized, in its sole discretion to

cease making DIP Term Facility advances to the Debtors, (ii) the DIP Revolving Agent shall be

fully authorized, in its sole discretion, to cease making DIP Revolving Facility advances to the

Debtors, (iii) the DIP Term Agent shall be fully authorized, in its sole discretion to terminate the

Debtors’ use of the DIP Collateral (including without limitation Cash Collateral) pursuant to this

Order and the Budget, (iv) the DIP Revolving Agent shall be fully authorized to terminate the

Debtors’ use of Cash Collateral pursuant to this Order and the Budget, (v) the DIP Term Agent

shall be fully authorized, in its sole discretion to immediately terminate the DIP Term Facility,

and accelerate and demand repayment of the DIP Term Facility obligations then outstanding,

and/or (vi) the DIP Revolving Agent shall be fully authorized, in its sole discretion, to

immediately terminate the DIP Revolving Facility and accelerate and demand repayment of the

DIP Revolving Facility obligations then outstanding.

20. Further, upon the occurrence of an Event of Default and transmission of a Default

Notice:

A. The DIP Term Agent and DIP Revolving Agent shall have the right, free

of the restrictions of sections 362 or under any other section of the Bankruptcy Code or

applicable law or rule (including, without limitation, Bankruptcy Rule 4001(a)), to take

immediate reasonable action to protect the DIP Collateral from harm, theft and/or

dissipation;

B. With respect to an Event of Default as to which a Default Notice has been

given, the Debtors, the Statutory Committee (if any), the U.S. Trustee, and the other DIP

Agents (to the extent permitted under the Intercreditor Agreement) shall have five (5)


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business days from the date of the Default Notice (the “Remedy Notice Period”) to obtain

an order of the Court enjoining or restraining the DIP Term Secured Parties and/or DIP

Revolving Secured Parties from taking action or exercising rights and remedies (other

than any rights and remedies set forth in Paragraph 19 herein, which may be exercised

immediately upon the satisfaction of the conditions set forth in such paragraph)

challenging whether an Event of Default in the Default Notice has occurred or is

continuing without cure (a “Restraint on Remedies”). During the Remedy Notice Period,

the DIP Term Agent and DIP Revolving Agent shall refrain from exercising their rights

and remedies (other than those set forth in Paragraph 19 and below). Immediately upon

expiration of the Remedy Notice Period unless a Restraint on Remedies has timely been

obtained from the Court, or with respect to and upon the Maturity Date (as defined in the

SWK DIP Term Sheet) or Maturity Date (as defined in the DIP Revolving Credit

Agreement), immediately:

(1) The DIP Term Agent shall have the right, free of the restrictions of

section 362 or under any other section of the Bankruptcy Code or Bankruptcy

Rules (including, without limitation, Bankruptcy Rule 4001(a)), to exercise

contractual, legal and equitable rights and remedies as to all or such part of the

DIP Collateral as it shall elect, and to apply the Proceeds (as such term is defined

below) of the DIP Collateral to the repayment of the DIP Term Facility

obligations and Prepetition Term Obligations, subject to the terms of the

Intercreditor Agreement and this Order; and

(2) The DIP Revolving Agent shall have the right, free of the

restrictions of section 362 or under any other section of the Bankruptcy Code or


- 35 -

Bankruptcy Rules (including, without limitation, Bankruptcy Rule 4001(a)), to

exercise contractual, legal and equitable rights and remedies as to all or such part

of the DIP Collateral as it shall elect, and to apply the Proceeds (as such term is

defined below) of the DIP Collateral to the repayment of the DIP Revolving

Facility obligations and Prepetition Revolving Obligations, subject to the terms of

the Intercreditor Agreement and this Order; and

(3) The DIP Term Agent and/or DIP Revolving Agent, should it so

elect in its sole and absolute discretion as exercised by the filing of an appropriate

statement with the Court, shall be deemed to have been granted “peaceful

possession” of, and right of access to, all or any portion of the DIP Collateral, by

the Debtors.

21. The Debtors shall provide the DIP Term Agent and DIP Revolving Agent with (i)

all financial statements, certificates, and reports required pursuant to the DIP Term Financing

Documents and DIP Revolving Financing Documents in accordance with the timeframes

specified therein and (ii) such additional information as the DIP Term Agent and/or DIP

Revolving Agent shall request from the Debtors. The DIP Term Agent, DIP Revolving Agent,

and their representatives shall have reasonable access to the Debtors’ business premises and to

the DIP Collateral in order to review and evaluate the physical condition of any of the DIP

Collateral and/or to inspect the financial records and other books and records of the Debtors

concerning the operations of the Debtors’ business.

22. For purposes of this Order, (a) “Proceeds” shall mean both (i) proceeds (as

defined in the Uniform Commercial Code of the State of New York as currently in effect) and

(ii) products, and any and all payments, proceeds or other consideration realized upon the sale,


- 36 -

liquidation, realization, collection or other manner of disposition of the DIP Collateral, whether

in the ordinary course of the Debtors’ business (including without limitation accounts,

receivables, and other proceeds arising from the Debtors’ sales of goods and/or performance of

services) or other than in the ordinary course of the Debtors’ business, and (b) “Disposition”

shall mean any sale, liquidation, realization, conversion or collection or other manner of

disposition of DIP Collateral other than in the ordinary course of the Debtors’ business,

including without limitation any sale authorized pursuant to section 363.

23. The Debtors shall maintain in full force and effect the deposit, clearing, dominion,

lockbox, and similar accounts maintained by or on behalf of the Debtors pursuant to the

Prepetition Revolving Loan Documents and Prepetition Term Loan Documents for the collection

of Proceeds obtained in the ordinary course of the Debtors’ business (the “Collection

Accounts”), and the cash management systems, treasury management systems, and payment

procedures under which such accounts and systems are administered (the “Collection

Procedures”). The Collections Accounts and Collection Procedures shall be maintained after the

Petition Date pursuant to the Prepetition Revolving Loan Documents and the DIP Revolving

Financing Documents. In furtherance of the foregoing, the DIP Revolving Agent shall be

deemed to have control of all of the Debtors’ bank accounts and to have a first-priority security

interest therein, subject to the terms of the Intercreditor Agreement (including Sections 4.2,

5.1(a), and 6.1(a) thereof), and any deposit account control agreements to which the Prepetition

Revolving Agent or Prepetition Term Agent is a party. The Debtors shall maintain no accounts

except those identified in the order approving the Debtors’ Motion for Entry of Interim and Final

Orders (I) Authorizing the Debtors to (A) Continue Using Their Cash Management System, and

(B) Maintain Existing Bank Accounts and Business Forms and Books and Records, (II)


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Authorizing Continued Intercompany Transactions; and (III) Granting Related Relief (the “Cash

Management Order”). From and after the date of the Petition Date, all collections and proceeds

of any DIP Collateral or Prepetition Collateral or goods or services provided by any Debtor and

all Cash Collateral that shall at any time come into the possession, custody, or control of any

Debtor, or to which any Debtor is now or shall become entitled at any time, shall be promptly

deposited in the Collection Accounts into which the collections and proceeds of the Prepetition

Collateral were deposited pursuant to the Prepetition Revolving Loan Documents, including

section 2.5 of the Prepetition Revolving Credit Agreement (or in such other accounts as are

designated by the DIP Revolving Agent in writing), which accounts shall be subject to the

dominion and control of the DIP Revolving Agent and the Prepetition Revolving Agent, in each

case subject to the provisions of the Intercreditor Agreement (including Sections 4.2, 5.1(a), and

6.1(a) thereof) and this Order. Subject to the Intercreditor Agreement and to the DIP Priority

Provisions, after the occurrence of a Termination Event, all proceeds in the Collection Accounts

shall be remitted for application to the DIP Obligations in accordance with this Order, the DIP

Documents and the Intercreditor Agreement, and the DIP Revolving Agent and the DIP Term

Agent shall be entitled to take all action that is necessary or appropriate to effectuate the

foregoing.

24. The Debtors and any successors to the Debtors, including without limitation any

successor trustee or trustees, shall assign or direct to the DIP Term Agent or DIP Revolving

Agent (as the case may be, consistent with the Intercreditor Agreement and the DIP Priority

Provisions) any and all Proceeds realized in any Disposition of any DIP Collateral, and

immediately deliver any and all such Proceeds which come into their possession to the DIP Term

Agent or DIP Revolving Agent (as applicable) in the form received; provided, however, that the


- 38 -

foregoing shall be subject in all respects to (a) payment of the Carve-Out and (b) the priorities of

Liens with respect to the Liens granted by or permitted under this Order. The foregoing is

without prejudice to the rights of (a) the DIP Term Agent, DIP Revolving Agent, the Statutory

Committee (if any), or any other party to object to any proposed Disposition, (b) any third party

with respect to the allocated Proceeds of any Disposition of Collateral encumbered by a Senior

Third Party Lien, or (c) the rights of third parties set forth below with respect to a Challenge

Action and the remedies that may result from a successful Challenge Action. The DIP Term

Agent and Prepetition Term Agent are hereby authorized, subject to the terms of the Intercreditor

Agreement, to credit-bid all or any of the applicable obligations under the DIP Term Facility or

Prepetition Term Loan Documents at any Disposition of any Prepetition Collateral and/or DIP

Collateral. The DIP Revolving Agent and Prepetition Revolving Agent are hereby authorized,

subject to the terms of the Intercreditor Agreement, to credit-bid all or any of their applicable

obligations under the DIP Revolving Facility or Prepetition Revolving Loan Documents at any

Disposition of any Prepetition Collateral and/or DIP Collateral.

25. All Proceeds retained by the DIP Term Agent or DIP Revolving Agent, as the

case may be, shall be applied to the repayment of the DIP Term Facility obligations, DIP

Revolving Facility obligations, Prepetition Term Loan Obligations, and Prepetition Revolving

Loan Obligations, consistent with the terms of the Intercreditor Agreement and the DIP Priority

Provisions, until such obligations are paid in full; provided, however, that the foregoing shall be

subject in all respects to the terms of the Intercreditor Agreement and the priorities of Liens

granted by or permitted under this Order. Such applications of Proceeds shall be free and clear

of any claim, charge, assessment or other liability.


- 39 -

26. Subject to the right to bring a Challenge Action as set forth in Paragraph 29

below, upon entry of this Order:

A. The Stipulations shall be binding upon the Debtors and all other persons,

entities, and/or parties in all circumstances;

B. The validity, extent, priority, perfection, enforceability and non-

avoidability of the Prepetition Term Secured Parties and the Prepetition Revolving

Secured Parties’ respective prepetition claims and liens against the Debtors and the

Prepetition Collateral shall not be subject to challenge by the Debtors or any other

person, entity, or party; and

C. Neither the Debtors, nor any other person, entity, or party shall seek to

avoid or challenge (whether pursuant to Chapter 5 of the Bankruptcy Code or otherwise)

any transfer made by or on behalf of the Debtors to or for the benefit of any of the

Prepetition Term Secured Parties or any of the Prepetition Revolving Secured Parties

prior to the Petition Date.

27. In consideration of and as a condition to the DIP Term Secured Parties and DIP

Revolving Secured Parties making the Interim DIP Advances and providing credit and other

financial accommodations to the Debtors pursuant to the terms of this Order and the DIP Credit

Facility Documents, each of the Debtors (collectively, the “Releasor”), subject to Paragraph 29

herein, absolutely releases, forever discharges and acquits each of the Prepetition Term Secured

Parties, each of the Prepetition Revolving Secured Parties, and their respective successors and

assigns, affiliates, principals, officers, directors, managers, general partners, employees,

attorneys and other representatives (the “Releasees”) of and from any and all claims, demands

causes of action, damages, choses in action, and all other claims, counterclaims, defenses, setoff


- 40 -

rights, and other liabilities whatsoever (the “Prepetition Released Claims”) of every kind, name,

nature, and description, whether known or unknown, both at law and equity (including, without

limitation, any “lender liability” claims) that the Releasor may now or hereafter own, hold, have

or claim against each and every of the Releasees arising at any time prior to the entry of this

Order (including, without limitation, claims relating to the Debtors, the Prepetition Term Loan

Documents, the Prepetition Revolving Loan Documents, and other documents executed in

connection therewith, and the transactions and obligations thereunder); provided, however, that

such release shall not be effective with respect to the Debtors until entry of the Final Order, and

with respect to the Debtors’ bankruptcy estates, until the expiration of the Challenge Period. In

addition: (i) upon the indefeasible payment, in full, in cash, of all DIP Term Facility obligations

owed to the DIP Term Secured Parties arising under this Order and the DIP Term Financing

Documents, the DIP Term Secured Parties shall be released from any and all obligations, actions,

duties, responsibilities, and causes of action arising or occurring in connection with or related to

the DIP Term Financing Documents, and (ii) upon the indefeasible payment, in full, in cash, of

all DIP Revolving Facility obligations owed to the DIP Revolving Secured Parties arising under

this Order and the DIP Term Financing Documents, the DIP Revolving Secured Parties shall be

released from any and all obligations, actions, duties, claims, liabilities, responsibilities, and

causes of action arising or occurring in connection with or related to the DIP Revolving

Financing Documents.

28. Subject to entry of the Final Order, the Releasor hereby absolutely,

unconditionally, and irrevocably covenants and agrees with each Releasee that it will not sue (at

law, in equity, or in any other proceeding) any Releasee on the basis of any Prepetition Released

Claims released and discharged by Releasor pursuant to this Order. If Releasor violates this


- 41 -

covenant, the Debtors agree to pay, in addition to such other damages as any Releasee may

sustain as a result of such violation, all reasonable attorneys’ fees and costs incurred by any

Releasee as a result of such violation.

29. Notwithstanding any other provisions of this Order, any interested party (other

than the Debtors or their Professionals) in this case (including, without limitation, the Statutory

Committee (if any)) shall have until the earlier of (i) sixty (60) calendar days from the Petition

Date; or (ii) forty-five (45) days from the date on which a Statutory Committee is formed (such

period, the “Challenge Period”), to commence an adversary proceeding against the Prepetition

Term Secured Parties and/or the Prepetition Revolving Secured Parties (as applicable) for the

purpose (collectively, a “Challenge Action”) of:

A. Challenging the validity, extent, priority, perfection, enforceability and

non-avoidability of the Prepetition Term Liens and/or the Prepetition Revolving Liens;

B. Seeking to avoid or challenge (whether pursuant to Chapter 5 of the

Bankruptcy Code or otherwise) any transfer made by or on behalf of the Debtors to or for

the benefit of the Prepetition Term Secured Parties and/or any of the Prepetition

Revolving Secured Parties (as applicable) prior to the Petition Date;

C. Seeking damages or equitable relief against the Prepetition Term Secured

Parties or any of the Prepetition Revolving Secured Parties (as applicable) arising from or

related to their prepetition business and lending relationships with the Debtors, including

without limitation equitable subordination, recharacterization, lender liability and

deepening insolvency claims and causes of action; or

D. Challenging any other matter to be waived or released pursuant to this

Order (including, without limitation, pursuant to Paragraphs 26 and 27).


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30. All parties in interest, including without limitation the Statutory Committee (if

any), that fail to act in accordance with the time periods set forth in the preceding paragraph shall

be, and hereby are, barred forever from commencing a Challenge Action and shall be bound by

the waivers, Stipulations, and terms set forth in this Order (including Paragraphs 26, 27, and 28

of this Order). Any Challenge Action filed shall prohibit application of this paragraph only to

the extent of the specific matters set forth in such Challenge Action on the date of filing.

31. The respective legal and equitable claims, counterclaims, defenses and/or rights of

offset and setoff of the Prepetition Term Secured Parties and the Prepetition Revolving Secured

Parties in response to any such Challenge Action are reserved, and the ability of a party to

commence a Challenge Action shall in no event revive, renew or reinstate any applicable statute

of limitations which may have expired prior to the date of commencement of such Challenge

Action. Despite the commencement of a Challenge Action, the prepetition claims and Liens of

the Prepetition Term Secured Parties and the Prepetition Revolving Secured Parties shall be

deemed valid, binding, properly perfected, enforceable, non-avoidable, not subject to

disallowance under section 502(d) of the Bankruptcy Code and not subject to subordination

under section 510 of the Bankruptcy Code until such time as a final and non-appealable

judgment and order is entered sustaining such Challenge Action in favor of the plaintiffs therein.

Notwithstanding anything to the contrary contained in this Order, the Court expressly reserves

the right to unwind any discretionary roll-up of Prepetition Term Loan Obligations or Prepetition

Revolving Loan Obligations into post-petition obligations that is contemplated to be approved

upon entry of the Final Order, or to order other appropriate relief against the Prepetition Term

Secured Parties and/or the Prepetition Revolving Secured Parties in the event there is a timely

and successful Challenge Action by any party in interest to the validity, enforceability, extent,


- 43 -

perfection or priority of the Prepetition Term Liens or Prepetition Revolving Liens or the

amount, validity, or enforceability of the Prepetition Term Loan Obligations or Prepetition Term

Loan Obligations.

32. Upon the closing of the Debtors’ proposed sale of substantially all of their assets,

the successful bidder is directed to pay the amounts payable under the 363 Sale asset purchase

agreement directly to the DIP Term Agent and DIP Revolving Agent, for immediate application

to the DIP Term Facility obligations, DIP Revolving Facility obligations, Prepetition Term Loan

Obligations, and Prepetition Revolving Loan Obligations, subject to payment of the Carve-Out

and subject to and consistent with the terms of the Intercreditor Agreement and this Order, which

application shall become indefeasible with respect to any DIP Term Facility obligations, DIP


Loan Obligations that are not subject to a timely Challenge Action commenced prior to the

expiration of the Challenge Period.

33. In making decisions to advance any extensions of credit to the Debtors pursuant

to the DIP Term Facility or DIP Revolving Facility or in taking any other actions reasonably

related to this Order or the DIP Term Financing Documents or DIP Revolving Financing

Documents (including, without limitation, the exercise of its approval rights with respect to any

budget), the DIP Term Secured Parties and the DIP Revolving Secured Parties shall have no

liability to any third party and shall not be deemed to be in control of the operations of the

Debtors or to be acting as a “control person”, “responsible person” or other “owner or operator”

with respect to the operation or management of the Debtors (as such terms, or any similar terms,

are used in the Internal Revenue Code, the United States Comprehensive Environmental

Response Compensation and Liability Act, as amended, or any similar federal or state statute),


- 44 -

and neither the DIP Term Secured Parties’ or DIP Revolving Secured Parties’ relationship with

the Debtors shall constitute or be deemed to constitute a joint venture or partnership of any kind

with the Debtor.

34. This Order shall be binding upon and inure to the benefit of the DIP Term

Secured Parties, the DIP Revolving Secured Parties, the Prepetition Term Secured Parties, the

Prepetition Revolving Secured Parties, the Debtors, and their respective successors and assigns,

including, without limitation, any trustee, responsible officer, examiner, estate administrator or

representative, or similar person appointed in a case for the Debtors under any chapter of the

Bankruptcy Code. Except as set forth herein with respect to a Challenge Action and the Carve-

Out, no rights are created under this Order for the benefit of any creditor of the Debtors, any

other party in interest in the Debtors’ bankruptcy cases, or any other persons or entities, or any

direct, indirect or incidental beneficiaries thereof.

35. Any order dismissing this Chapter 11 Case under section 1112 or otherwise shall

be deemed to provide (in accordance with sections 105 and 349 of the Bankruptcy Code) that (a)

the liens and security interests of the DIP Term Secured Parties and DIP Revolving Secured

Parties in the DIP Collateral shall continue in full force and effect notwithstanding such

dismissal until the DIP Term Facility and DIP Revolving Facility obligations are indefeasibly

paid and satisfied in full, in cash; and (b) this Court shall retain jurisdiction, to the extent

permissible under applicable law, notwithstanding such dismissal, for the purposes of enforcing

the DIP Term Superpriority Claim, the DIP Revolving Superpriority Claim, the DIP Term Liens,

the DIP Revolving Liens, the Term Adequate Protection Liens, the Revolving Adequate

Protection Liens, the Term Adequate Protection Claims, and the Revolving Adequate Protection

Claims.


- 45 -

36. To the extent that any of the provisions of this Order shall conflict with any

provisions of the DIP Term Sheet, or with any order of the Court authorizing the Debtors to

continue the use of prepetition bank accounts, cash management systems, treasury management

systems, or business forms, or any similar orders, this Order is deemed to control and supersede

the conflicting provisions therein.

37. The terms and conditions of this Order shall be effective and immediately

enforceable upon its entry by the Clerk of the Court notwithstanding any potential application of

Fed. R. Bankr. P. 6004(h) or otherwise. Furthermore, to the extent applicable, the notice

requirements and/or stays imposed by Fed R. Bankr. P. 4001(a)(3), 6003(b), and 6004(a) are

hereby waived for good and sufficient cause.

38. Nothing in this Order shall preclude the Court from entering a Final Order

containing provisions inconsistent with or contrary to the provisions of this Order, provided,

however, that the DIP Term Secured Parties, the DIP Revolving Secured Parties, Prepetition

Term Secured Parties, and Prepetition Revolving Secured Parties shall be entitled to the benefits

and protections of this Order, including (a) the adequate protection granted and allowed in this

Order, and (b) the protections afforded pursuant to section 364(e), with respect to all loans,

advances, and other financial, accommodations made by them pursuant to this Order. The DIP

Term Liens, DIP Revolving Liens, the priority afforded the Interim DIP Advances, and the

adequate protection afforded to the Prepetition Term Secured Parties and Prepetition Revolving

Secured Parties, as set forth in this Order, shall be binding on the Debtors and any successor

trustee or trustees even if this Order is reversed or modified on appeal with respect to all loans,

advances, and other financial accommodations made by them pursuant to this Order. Except as

provided herein, no Proceeds, Cash Collateral or Carve-Out may be used by any party in interest


- 46 -

seeking to modify any of the rights granted to DIP Term Secured Parties, Prepetition Term

Secured Parties, DIP Revolving Secured Parties, or Prepetition Revolving Secured Parties

hereunder or in the DIP Term Financing Documents, Prepetition Term Loan Documents, DIP

Revolving Financing Documents, or Prepetition Revolving Loan Documents.

39. The Debtors and the DIP Term Agent or DIP Revolving Agent (as applicable)

may implement non-material modifications of the DIP Term Financing Documents or DIP

Revolving Financing Documents without the need for notice or further approval of the Court,

provided, however, that copies of such amendments will be provided to other DIP Agents, the

U.S. Trustee and the Statutory Committee (if any). The Debtors and the DIP Term Agent or DIP

Revolving Agent (as applicable) may implement material modifications of the DIP Term

Financing Documents or DIP Revolving Financing Documents on at least seven (7) calendar

days prior notice to the other DIP Agents, the Statutory Committee (if any) and the U.S. Trustee,

and any proposed material modification that is objected to within such period shall only be

implemented to the extent approved by the Court.

40. The Debtors are authorized to do and perform all acts, to make, execute and

deliver all instruments and documents, and to pay all fees and expenses that may be required or

necessary for the Debtors’ performance under this Order, the DIP Term Financing Documents,

or the DIP Revolving Financing Documents, including, without limitation, (a) the execution of

such documents, (b) the payment of the fees and other expenses described herein or in such

documents as they become due, including, without limitation, agent fees, commitment fees, letter

of credit fees, and facility fees.

41. Without in any way limiting the applicability of any agreement that by its terms is

applicable to the Prepetition Term Loan Obligations and Liens, to the extent that the Prepetition


- 47 -

Term Agent is the secured party under any security agreement, mortgage, leasehold mortgage,

landlord waiver, financing statement, or account control agreement, listed as loss payee or

additional insured under any of the Debtors’ insurance policies, or is the secured party under any

of the Prepetition Term Loan Documents, the DIP Term Agent shall be deemed to be the secured

party under such security agreements, mortgages, account control agreements and other

agreements, and loss payee, or additional insured under the Debtors’ insurance policies, and such

agreements and documents shall be deemed amended so as to secure and apply to the DIP Term

Facility and obligations thereunder (with necessary conforming changes deemed to have been

made, as applicable).


applicable to the Prepetition Revolving Loan Obligations and Liens, to the extent that the

Prepetition Revolving Agent is the secured party under any security agreement, mortgage,

leasehold mortgage, landlord waiver, financing statement, lockbox agreement or account control

agreement, listed as loss payee or additional insured under any of the Debtors’ insurance

policies, or is the secured party under any of the Prepetition Revolving Loan Documents, the DIP

Revolving Agent shall be deemed to be the secured party under such security agreements,

mortgages, lockbox agreements, account control agreements and other agreements, and loss

payee, or additional insured under the Debtors’ insurance policies, and such agreements and

documents shall be deemed amended so as to secure and apply to the DIP Revolving Facility and

obligations thereunder (with necessary conforming changes deemed to have been made, as

applicable).

43. Without in any way limiting the applicability of the Intercreditor Agreement to

the Prepetition Revolving Loan Obligations and Liens and the Prepetition Term Loan


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Obligations and Liens, the DIP Revolving Agent and the DIP Term Agent shall be deemed to be

parties to the Intercreditor Agreement, with the terms and provisions thereof applying to the DIP

Revolving Facility and the DIP Term Facility and the respective applicable DIP Revolving Liens

and DIP Terms Liens and claims and obligations under the DIP Revolving Facility and the DIP

Term Facility (with necessary conforming changes deemed to have been made solely for such

purposes) to the same extent as such terms and provisions apply to the Prepetition Revolving

facility and the Prepetition Term facility, the Prepetition Revolving Loan Obligations and

Prepetition Term Loan Obligations, and Prepetition Revolving Liens and Prepetition Term Liens,

and each of the DIP Revolving Agent and the DIP Term Agent shall have all rights and powers

attendant to that position (including rights of enforcement) and shall be bound thereby.

44. The Court has considered and determined the matters addressed herein pursuant

to its powers under the Bankruptcy Code, including the power to authorize the Debtors to obtain

credit on terms and conditions to which the Debtors and DIP Term Agent and DIP Revolving

Agent have agreed. Thus, each of the terms and conditions constitutes a part of the authorization

under sections 364 of the Bankruptcy Code, and is, therefore, subject to the protections contained

in section 364(e) of the Bankruptcy Code, regardless of (i) any stay, modification, amendment,

vacation, or reversal of this Order, the DIP Term Financing Documents, or the DIP Revolving

Financing Documents or any term hereunder or thereunder; (ii) the failure to obtain a final order

pursuant to Bankruptcy Rule 4001(c)(2), or (iii) the dismissal or conversion of the Debtors’

chapter 11 cases.

45. A final hearing with respect to the Motion is scheduled for September ___, 2018

at ___________.m. (ET) (the “Final Hearing”) before the Honorable Robert D. Drain, United

States Bankruptcy Judge. The Debtors shall promptly mail copies of this Order (which shall


- 49 -

constitute adequate notice of the Final Hearing) to the parties having been given notice of the

Interim Hearing and to any other party that has filed a Rule 2002 request for service. Any party

in interest objecting to the relief sought at the Final Hearing shall file written objections, and

serve them on (i) the Debtors’ proposed counsel, Foley Gardere, attn: John P. Melko, 1000

Louisiana Street, Suite 2000, Houston, TX 77002; (ii) the DIP Term Secured Parties’ counsel,

Holland & Knight LLP, attn: Brent McIlwain, 200 Crescent Court, Suite 1600, Dallas, TX 75201

and Holland & Knight LLP, attn.: Arthur Rosenberg, 31 W. 52nd Street, 12th Floor, New York,

NY 10019; (iii) the DIP Revolving Secured Parties’ counsel, Duane Morris LLP, attn:

Christopher M. Winter, 222 Delaware Avenue, Suite 1600, Wilmington, DE 19801; (iv) the U.S.

Trustee, attn: Susan Arbeit, Esq. & Brian Masumoto, Esq.; and (v) any Statutory Committee, if

applicable, on or before ________.m. (ET) on __________, 2018.

Dated: August ______, 2018

THE HONORABLE ___________ UNITED STATES BANKRUPTCY JUDGE


EXHIBIT 1

Budget


Provant Health BK CF Fcst Prelim Draft 8/25/18 (11/2 Close)

Aug'18 Aug'18 Sep'18 Sep'18 Sep'18 Sep'18 Oct'18 Oct'18 Oct'18 Oct'18 Oct'18

Draft Discussion Document Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst

Subject to material change Pre Post Post Post Post Post Post Post Post Post Post

WK # 1 2 3 4 5 6 7 8 9 10 11 BK Scenario

WK End 8/24 8/31 9/7 9/14 9/21 9/28 10/5 10/12 10/19 10/26 11/2 11 weeks

9 Revenue (Includes Unbilled HWOS Rev)

10 Biometric Screening.............................................. 281,277 281,277 789,586 839,290 1,120,824 1,025,392 1,383,137 2,026,598 1,383,137 1,383,137 1,383,137 11,896,790

11 Coaching................................................................ - - 263,107 - - - - 392,208 - - - 655,315

12 Online Health Portal.............................................. - - 905,181 - - - - 933,546 - - - 1,838,726

13 HH Kits................................................................... - - 35,938 35,938 35,938 35,938 31,340 31,340 31,340 31,340 31,340 300,450

14 Total Weekly Revenue 281,277 281,277 1,993,811 875,227 1,156,761 1,061,330 1,414,477 3,383,692 1,414,477 1,414,477 1,414,477 14,691,28215

16 BBC Collections (Screen/Coach/Portal)................ 664,030 401,662 592,283 435,595 1,128,624 1,158,117 738,842 253,996 1,024,907 1,100,833 636,173 8,135,063

17 Kits Collections (outside BBC)............................... 598 2,300 33,042 32,488 30,786 - - 35,938 35,938 35,938 35,938 242,963

18 Total Weekly Collections 664,628 403,962 625,325 468,082 1,159,411 1,158,117 738,842 289,934 1,060,845 1,136,770 672,111 8,378,02719

20 Operating Disbursements

21 Payroll.................................................................... 559,083 473,951 483,000 451,233 177,261 979,775 178,918 1,018,092 178,918 1,270,222 592,378 6,362,83022

23 COD Vendor Payments

24 Lab Testing............................................................. 7,000 118,845 49,521 53,213 50,038 53,213 113,380 117,842 113,380 117,098 113,900 907,429

25 Event Supplies/Materials...................................... 128,632 348,795 177,355 288,878 146,872 595,148 138,355 135,209 587,281 105,396 304,647 2,956,567

26 Insurance/Benefits................................................ - 162,925 16,585 22,033 165,500 - 16,585 13,259 154,277 - - 551,164

27 Shipping................................................................. 45,500 50,500 60,869 60,500 60,869 70,500 70,500 75,872 80,872 85,872 75,500 737,354

28 Software/Subscriptions/IT Service....................... 32,531 6,502 201,160 18,019 22,512 3,000 301,458 6,000 27,527 3,000 28,000 649,708

29 Rent & Utilities...................................................... - 140,500 - - - 140,500 - - - - 140,500 421,500

30 Contract/Temp Labor............................................ 55,016 21,292 71,082 45,917 47,626 47,361 79,298 51,073 51,073 51,073 50,366 571,177

31 T&E (non HP's)....................................................... 49,422 39,737 33,200 28,700 28,700 28,700 35,483 54,983 24,983 24,983 24,983 373,874

32 Phone/Mobile Data/Tablets................................. 18,304 - - 60,708 13,200 5,900 19,500 14,900 62,808 6,200 25,400 226,920

33 Accounting Fees.................................................... 2,166 - - 1,300 21,400 - - - 21,700 50,000 - 96,566

34 Miscellaneous........................................................ 42,088 27,650 23,200 12,500 19,126 12,944 33,950 12,500 16,076 18,950 22,694 241,678

35 Amazon Gift Card Redemptions (operational).... - - - - - - - - - - - -

36 Other Professional Fees........................................ 61,887 25,000 2,500 6,000 - 3,500 2,500 6,000 - - 6,000 113,387

37 Equip Purchases.................................................... 18,125 - 13,773 23,923 1,125 1,125 1,125 1,125 23,923 1,125 1,125 86,494

38 Board Fees............................................................. - - - - - - - - - - - -

39 Total COD Vendor Payments 460,671 941,745 649,244 621,690 576,969 961,890 812,134 488,762 1,163,900 463,697 793,116 7,933,81840

43 Total Operating Disbursements 1,019,754 1,415,696 1,132,244 1,072,923 754,230 1,941,665 991,052 1,506,855 1,342,818 1,733,919 1,385,493 14,296,64844

45 Operating Cash Flow (collection - disbursements) (355,126) (1,011,734) (506,919) (604,840) 405,181 (783,547) (252,210) (1,216,921) (281,973) (597,149) (713,382) (5,918,621)

46 Cumulative Operating Cash Flow (355,126) (1,366,860) (1,873,779) (2,478,620) (2,073,439) (2,856,986) (3,109,196) (4,326,117) (4,608,090) (5,205,239) (5,918,621) (5,918,621)47

48 Non Operating Disbursements

51 IT Capex................................................................. - - - - - - - - - - - -

55

D&O Insurance Tail ($108K to return to estate

@ closing)300,000

--

-- - - - - - - 300,000

57 Legal Settlements.................................................. - - - - - - - - - - - -

58 Total Non Operating Disbursements 300,000 - - - - - - - - - - 300,000

59 Total Disbursements 1,319,754 1,415,696 1,132,244 1,072,923 754,230 1,941,665 991,052 1,506,855 1,342,818 1,733,919 1,385,493 14,596,64860

61 BK Related Activity

62 Pre-Filing professional BK prep disbursments..... 621,475 - - - - - - - - - - 621,475

63 Pre-Filing professional BK Retainers..................... 275,000 80,000 - - - - - - - - - 355,000

64 Post filing professional Fee disbursements......... - - - - - 40,000 250,000 516,000 - - 316,000 1,122,000

65 Contract Cure Amount & Utility Deposit.............. - 78,000 100,000 - - - - - - - - 178,000

66 Court/U.S. Trustee Fees........................................ - 20,000 - - - - - - - - 20,000 40,000

67 Placeholder............................................................ - - - - - - - - - - - -

68 Placeholder............................................................ - - - - - - - - - - - -

69 BK Related Disbursements 896,475 178,000 100,000 - - 40,000 250,000 516,000 - - 336,000 2,316,475

70 Cumulative BK Disbursements 896,475 1,074,475 1,174,475 1,174,475 1,174,475 1,214,475 1,464,475 1,980,475 1,980,475 1,980,475 2,316,475 2,316,47571

72 Net Cash Flow (collections - disbursements) (1,551,601) (1,189,734) (606,919) (604,840) 405,181 (823,547) (502,210) (1,732,921) (281,973) (597,149) (1,049,382) (8,535,096)

73 Cumulative Cash Flow (1,551,601) (2,741,335) (3,348,254) (3,953,095) (3,547,914) (4,371,461) (4,873,671) (6,606,592) (6,888,565) (7,485,714) (8,535,096) (8,535,096)74

75 Beg. Cash Balance (net of O/S checks) 366,000 92,269 - - - - - - - - - 350,795

76 Less Op. & Non Op Disbursements...................... (1,319,754) (1,415,696) (1,132,244) (1,072,923) (754,230) (1,941,665) (991,052) (1,506,855) (1,342,818) (1,733,919) (1,385,493) (14,596,648)

77 Less BK Related Disbursements............................ (896,475) (178,000) (100,000) - - (40,000) (250,000) (516,000) - - (336,000) (2,316,475)

78 Plus Kits Collections (non BBC)............................. 598 2,300 33,042 32,488 30,786 - - 35,938 35,938 35,938 35,938 242,963

79 Plus SWK Term Loan Capital Infusion................... 1,240,000 - - - - - - - - - - 1,240,000

80 Plus SWK DIP Loan................................................. - 650,000 - - - 300,000 - - - - - 950,000

81 Plus CNH DIP Loan Draws..................................... 701,900 849,127 1,199,203 1,040,435 723,444 1,681,665 1,241,052 1,986,917 1,306,880 1,697,982 1,685,556 14,114,160

82 End Cash Balance 92,269 - - - - - - - - - - -

83 Excess availability on the CNH DIP* (0) 49,916 599,801 353,169 772,435 80,784 128,217 997,415 1,038,126 699,124 198,639 198,639

84 *Model borrows the lesser of (a) availability or (b) cash needed to fund disbursements85 *Assumes removal of $675K reserves (deferred revenue & Lanier)

86 CNH LOC Balance 4,810,224 -

87 DIP Loan Balance 5,313,235 5,920,754 6,526,195 6,121,614 6,712,953 7,215,763 8,949,284 9,231,857 9,829,606 10,976,324 10,976,324

88 SWK Term Loan Facility Principal & Interest 18,447,856 18,690,107 18,690,107 18,690,107 18,690,107 18,955,751 18,955,751 18,955,751 18,955,751 18,955,751 19,230,986 19,230,986

90 SWK DIP Loan Outstanding Balance - 650,000 650,000 650,000 650,000 957,421 957,421 957,421 957,421 957,421 968,351 968,351

91 SWK DIP Loan Collateral Shortfall - (650,000) (650,000) (650,000) (650,000) (957,421) (957,421) (957,421) (957,421) (957,421) (968,351) (968,351)92

93 Value created from the Estate Post Petition

94 Beg. Post Petition Value Created - (1,134,420) (272,853) (470,548) (68,016) (948,351) (524,926) 1,351,911 1,423,570 1,104,127 -

95 Plus Post Petition Revenue (A/R Generated) 281,277 1,993,811 875,227 1,156,761 1,061,330 1,414,477 3,383,692 1,414,477 1,414,477 1,414,477 14,410,005

96 Less Operating Disbursements (1,415,696) (1,132,244) (1,072,923) (754,230) (1,941,665) (991,052) (1,506,855) (1,342,818) (1,733,919) (1,385,493) (13,276,894)

97 End Post Petition Value Created from Operations (1,134,420) (272,853) (470,548) (68,016) (948,351) (524,926) 1,351,911 1,423,570 1,104,127 1,133,111 1,133,111

98 Post Petition BK Related Disbursements (178,000) (100,000) - - (40,000) (250,000) (516,000) - - (336,000) (1,420,000)

Draft Discussion Document - Subject to Material Change 2


EXHIBIT 2

DIP Revolving Credit Agreement


Please initial upon approval _______________ 4818-0627-1089.1

Timothy Peters Principal CNH Finance LP 2 Greenwich Plaza 4th Floor Greenwich, CT 06830 (203) 742-3051

August 27, 2018 Jim Fleet Interim CEO Hooper Holmes, Inc. 560 N. Rogers Road Olathe, KS 66062 Dear Mr. Fleet:

CNH Finance Fund I, L.P. (“CNH” or “DIP Lender”) is pleased to confirm in this letter its interest in working on a potential debtor in possession revolving line of credit (the “DIP Loan”) for Hooper Holmes, Inc. and certain of its affiliates (as more fully set forth below, the “Borrowers”) which would be secured by a first-priority security interest and lien in, among other property and rights, the post-petition accounts receivable of the Borrowers. The terms set forth below are based on our discussions with the Borrowers to date and remain subject to confirmation through our due diligence. We have limited this letter to an identification of the material terms of the financing we have discussed. There will be additional terms, conditions, covenants, representations, warranties, default clauses and other provisions in the definitive documents for the transaction. This letter represents an expression of interest only and is intended to be used as a basis for continued discussions. This letter does not constitute a commitment of CNH to provide the financing described herein or an obligation by CNH to continue discussing such financing, to conduct any due diligence with respect to such financing or to initiate credit approval proceedings for any such financing. The execution of definitive documents will supersede the provisions of the terms set forth in this letter. Definitions as set forth in the “Other Definitions” section hereof are incorporated herein throughout.

Borrowers: HOOPER HOLMES, INC., a New York corporation, HOOPER

DISTRIBUTION SERVICES, LLC, a New Jersey limited liability company, HOOPER WELLNESS, LLC, a Kansas limited liability company, ACCOUNTABLE HEALTH SOLUTIONS, LLC, a Kansas limited liability company, HOOPER INFORMATION SERVICES, INC., a New Jersey corporation, HOOPER KIT SERVICES, LLC, a Kansas limited liability company, and PROVANT HEALTH SOLUTIONS, LLC, a Rhode Island limited liability company (collectively, the as “Borrowers”)

Lender: CNH or an affiliated fund of CNH Finance, LP


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Please initial upon approval _______ 4818-0627-1089.1

Facility: DIP Lender to provide senior secured priming and superpriority postpetition revolving financing debtor-in-possession loan (the “DIP Revolving Facility”).

SWK Funding LLC (the “DIP Term Lender”) shall separately provide a consolidated term loan, on terms and conditions set forth in separate documents and agreements between the Debtors and DIP Term Lender (the “DIP Term Facility”), in the aggregate principal amount of not less than $1,600,000. The DIP Term Facility and DIP Revolving Facility shall be referred to herein collectively as the “DIP Facility”.

Facility Amount: Up to $12,000,000 (the “Facility Amount”), inclusive of any obligations outstanding under the prepetition Revolving Loan Documents, which shall be paid, “rolled up” and deemed secured postpetition obligations under the DIP Revolving Facility.

Availability under the DIP Revolving Facility may be reduced by reserves as may be established by CNH in its reasonable discretion from time to time to reflect, among other things, contingencies or risks that may materially impact the DIP Collateral (as defined below), the liens of CNH, or the business and operations of the Debtors.

Purpose: To provide working capital through a bankruptcy sale process and

reorganization proceedings in accordance with the Budget approved in advance by CNH.

Budget and Variances: Subject to the Budget Variances (as defined below), (i) the Debtors’ total budgeted, aggregate cash receipts and cash disbursements (excluding fees and expenses of third party professionals engaged by or for the benefit of Debtors or the DIP Lender (collectively, “Professional Fees”)) shall each be adhered to, on a weekly basis and a cumulative basis for the Budget (as defined below) period then ending as described below, and (ii) the Debtors’ disbursements for Professional Fees (which shall be reported in a manner so that Professional Fees for each retained professional shall be reflected on its own line item) shall be adhered to on a cumulative basis for that portion of the Budget period then ending, except as to the DIP Lender’s and DIP Term Lender’s Professional Fees (which DIP Lender and DIP Term Lender Professional Fees shall not be limited by the Budget).

Actual amounts for aggregate cash receipts and aggregate cash disbursements (which shall not and does not include any Professional Fees) within the Budget may not vary from the applicable Budgeted amounts for such items by (i) more than ten percent (10%) on a weekly basis; or (iii) ten percent (10%) on a cumulative basis for that portion of the Budget period then ended (collectively, the “Budget Variances”).


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Although fees incurred by professionals retained by CNH and the DIP Term Lender are not limited by the Budget: (i) No DIP Term Facility advances shall be used to pay any fees, costs, or expenses of professionals the Revolving Lender in excess of the amounts set for such professionals set forth in the Budget; and (ii) No DIP Revolving Facility advances shall be used to pay any fees, costs, or expenses of professionals of SWK in excess of the amounts set forth for such professionals set forth in the Budget On or before the third business day of each week, commencing with the first week following the Petition Date, the Debtors shall deliver to CNH an Approved Budget Variance Report. The Debtors’ shall provide CNH with an updated budget not later than three weeks after the Petition Date, and every three weeks thereafter, and such updated budget(s), in each case in form and substance satisfactory to CNH, once approved by CNH, shall become the Budget for all purposes going forward hereunder until a subsequent budget is submitted and approved by CNH. In the event that the Debtors fail to comply with the Budget Variances in any week, the Debtors’ obligation to provide updated budget(s) shall then become a weekly obligation.

Termination Date: The earliest to occur of: (a) the Maturity Date; (b) twenty-five (25) days after

the Petition Date if the Final Order has not been entered; (c) acceleration of the obligations under the DIP Term Facility or DIP Revolving Facility due to an Event of Default; (d) the effective date of a confirmed plan of reorganization or liquidation that provides for indefeasible payment in full, in cash of all obligations owing under the DIP Facility or is otherwise acceptable to CNH in its sole discretion; (e) the date which is the closing date of any sale of all or substantially all of the Debtors’ assets; (f) the entry of an order by the Bankruptcy Court (i) granting relief from the automatic stay permitting foreclosure of any assets of any Debtor with a value in excess of $100,000 in the aggregate, (ii) granting any motion by CNH or the DIP Term Lender to terminate the use of cash collateral or lift the stay or otherwise exercise remedies against any cash collateral, (iii) appointing a trustee or an examiner with special powers, or (iv) dismissing or converting any of the Chapter 11 Cases; (g) the filing or support by any Debtor of a plan of reorganization that (i) does not provide for indefeasible payment in full, in cash of all obligations owing under the DIP Facility and (ii) is not otherwise acceptable to CNH in its sole discretion; (h) entry of a Bankruptcy Court order granting liens or claims that are senior or pari passu to the liens securing the DIP Facility, and (i) the date of termination or acceleration of the DIP Term Facility. The date on which the earliest of clauses (a) through (i) above occurs and CNH provides notice thereof to the Debtors being referred to hereinafter as the “Termination Date.” On the Termination Date, the DIP Revolving Facility shall be deemed terminated, and CNH shall


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have no further obligation to provide financing pursuant to the DIP Revolving Facility or the Revolving DIP Loan Documents.

Repayment: Each Debtor will promise and agree, jointly and severally, to pay to the DIP Lender all DIP Revolving Obligations (as defined herein), together with interest thereon accruing pursuant to the Revolving DIP Loan Documents, in full, in cash, at the times set forth in the Revolving DIP Loan Documents, but no later than the Termination Date.

The lockbox accounts (the “Lockbox Accounts”) presently maintained by Borrowers into which all collections in respect of all revenue and receivables are presently deposited shall be maintained and from and after the Petition Date all revenue and receivables shall be deposited into such Lockbox Accounts pursuant to existing agreements with Lender and the applicable depository banks (or as otherwise required by Lender from time to time in its sole discretion) (collectively, the “Lockbox Agreements”). (The depository institution(s) in which the Lockbox Account is maintained are referred to as the “Lockbox Bank”.) The Borrowers agrees not to terminate the Lockbox Accounts. The Lockbox Agreements shall instruct the Lockbox Bank to immediately transfer all funds paid into the Lockbox Accounts into a depository account or accounts owned and maintained by Lender or an Affiliate of Lender at such bank as Lender may communicate to the Lockbox Bank from time to time (the “Concentration Account”). The Concentration Account presently utilized by Lender shall be maintained and utilized by Lender as the Concentration Account from and after the Petition Date, subject to change in writing by Lender. The Borrowers agree not to revoke such instructions and the Borrowers hereby agree not to change or direct the custodian thereof to modify such sweep order or to provide any other or additional instructions to the custodian thereof. All funds transferred to the Concentration Account for application to the Revolving Loan Debt and the DIP Revolving Obligations shall be applied to reduce such obligations hereunder in the following order of priority: (i) payment of any fees and expense reimbursements due to Lender under, (ii) any other obligations of Borrowers not included in items (iii) and (iv) below, (iii) to any interest then due and owing, and (iv) to the principal amount outstanding. If as the result of collections of Accounts and/or any other cash payments received by Borrower there is a positive balance in favor of Borrower in the Concentration Accounts, such positive balance shall not accrue interest in favor of Borrowers, but shall be available to Borrowers in accordance with the terms of the Revolving DIP Loan Documents.

Collateral, Priority and Security: All obligations of the Borrowers to the DIP Lender in connection with the

DIP Revolving Facility, including all principal and interest, costs, fees and


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expenses (collectively, the “DIP Revolving Obligations”), shall be secured by valid, binding, continuing, enforceable, non-avoidable, and automatically and properly perfected first-priority security interests and liens in substantially all of the assets of the Borrowers (collectively, the “Collateral”), with such priority exceptions as noted herein.

More specifically, and in addition (as applicable), the DIP Lender shall receive:

Liens1 on all of the Collateral pursuant to sections 364(c)(2), 364(c)(3)

and 364(d) of the Bankruptcy Code (the “DIP Collateral”), which Liens shall be subject to the Carveout and shall be (A) solely as to the Term Loan Priority Collateral, whether arising prepetition or postpetition, junior only to any Liens of the the DIP Term Lenders and Term Loan Lenders, and to any valid, enforceable, and non-avoidable Prepetition Prior Liens2, (B) as to the Revolving Loan Priority Collateral arising before the Petition Date, senior to all other liens and interests other than any Prepetition Prior Liens, (C) as to any Collateral arising postpetition that falls within the definition of Revolving Loan Priority Collateral, senior to all other liens and interests, and (D) as to any New DIP Collateral3, pari passu with the Liens of the Term Loan Lenders and senior to all other liens and interests.

Subject to the Intercreditor Agreement, pursuant to section 364(c)(1) of the Bankruptcy Code, superpriority administrative claims having recourse to all prepetition and postpetition property of the Debtors’ estates, now owned or hereafter acquired and the proceeds of each of the foregoing, and having super-priority over any and all administrative expenses and claims, including administrative expenses of the kind specified in or ordered pursuant to 11 U.S.C. §§ 105, 326, 327, 328, 330, 331, 361, 362, 363, 364, 365, 503, 506, 507(a), 507(b), 546, 552, 726, 1113 and 1114, and pari passu with the super-priority administrative claims of the DIP Term Lender under the DIP Facility.

1 The term “Liens” and each other capitalized term used herein but not defined shall have the meaning set forth in that certain Intercreditor Agreement, dated as of August 29, 2016 by and between CNH and SWK Funding LLC, and such terms shall apply with respect to prepetition and postpetition periods and under current Documents, and subsequent debtor-in-possession loan documents. Each reference herein to the DIP Lender and the Revolving Loan Lender shall mean CNH in its capacity as both prepetition Revolving Loan Lender and as postpetition DIP Lender to the extent applicable. 2 “Prepetition Prior Liens” means any Liens that are (1) in existence on the Petition Date, (2) either perfected as of the Petition Date or perfected subsequent to the Petition Date solely to the extent permitted by section 546(b) of the Bankruptcy Code, and (3) senior in priority to the Liens in favor of the Revolving Loan Lender after giving effect to any intercreditor or subordination agreement. 3 All Collateral not consisting of assets included in the definitions of “Revolving Loan Priority Collateral” and “Term Loan Priority Collateral”, in each case whether arising before or after the Petition Date, or not susceptible to a Lien prior to the commencement of these cases shall be referred as the “New DIP Collateral.


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With respect to prepetition amounts owing to the Revolving Loan Lender, in connection with the use of cash collateral (to be negotiated), adequate protection, which will consist of, among other things, to the extent there is a diminution in value of the interests of the prepetition Revolving Loan Lender in Collateral (including cash collateral), the Revolving Loan Lender shall be granted and receive, (A) pursuant to sections 361, 363(e), and 364 of the Bankruptcy Code, replacement Liens upon all of the postpetition Collateral, (B) allowed superpriority administrative claims pursuant to and with the priority set forth in section 507(b) of the Bankruptcy Code, (C) payments of interest on the prepetition Revolving Loan Debt at the non-default rate under the Revolving Loan Documents on a current basis and (D) payments or reimbursement in cash for any and all fees, costs, expenses, and charges (including the reasonable fees, costs, and expenses of counsel and financial advisors for the Revolving Loan Lender) to the extent, and at the times, payable under the Revolving Loan Documents, including any unpaid fees, costs, and expenses accrued prior to the Petition Date, whether or not budgeted in the approved budget, and without further notice (with respect to postpetition professional fees, costs, and expenses), motion, or application to, order of, or hearing before, the bankruptcy court before which the cases are pending.

The Adequate Protection Liens shall not encumber Avoidance Actions, but, subject to entry of the Final Order, shall encumber Avoidance Proceeds.

Interim DIP Financing Order: Prior to providing any funding, DIP Lender will require that the

Bankruptcy Court approve a DIP financing order (in form and substance acceptable to DIP Lender in its sole discretion) on an interim basis, following notice to the US Trustee, top 20 creditors, all holders of liens in the Borrowers’ assets, all taxing authorities and all parties requesting notice, that contains all appropriate findings (including a finding that DIP Lender is entitled to the protections of Sections 364(e) and 552(b) of the Bankruptcy Code) and the following: (i) authorization of Borrowers to enter into the a credit agreement, in form and substance acceptable to DIP Lender in its sole discretion (the “Revolving DIP Loan Agreement”), and the transactions contemplated hereby, (ii) approval of the terms and conditions of the Revolving DIP Loan Agreement, (iii) a grant to DIP Lender of a superpriority Claim, subject only to the Carve-Out and Liens as noted above, (iv) a grant to DIP Lender of a first priority lien and security interest in all assets of the Borrowers, subject to other Liens only as noted above, (v) [reserved], (vi) a prohibition against using the proceeds of the DIP Loan (or any cash collateral) to initiate or prosecute any claims, causes of action, adversary proceedings or other litigation against DIP Lender or any of its officers, directors, equity holders, employees or affiliates, (vii) a prohibition against using the proceeds of the DIP Loan (or any cash collateral) to object, contest, or raise in any proceeding any defense to the


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validity, perfection, priority, extent or enforceability of the Revolving DIP Loan Agreement, the Revolving DIP Loan Documents or the Revolving Loan Documents, or the Liens contemplated by any of them or taking any action that would be injurious to CNH’s interests, (viii) [reserved], (ix) relief from the automatic stay to permit DIP Lender to take any action permitted under the Revolving DIP Loan Agreement, (x) an order directing that Debtor pay DIP Lender at the initial closing all DIP Lender’s reasonable costs, including with respect to due diligence and legal counsel fees related to the financing, and all fees required by the Revolving DIP Loan Agreement, and (xi) such other provisions as DIP Lender or DIP Lender’s counsel may require.

In addition, Upon entry of the Final Order, the Debtors hereby waive

any right to surcharge the prepetition collateral or DIP Collateral, whether pursuant to Bankruptcy Code sections 506(c) or 105(a) or under any other applicable law, other than the Carveout under the Final Order.

Upon entry of the Final Order, none of the DIP Lender or the Revolving Loan Lender shall be subject to the “equities-of-the case” exception of Bankruptcy Code section 552(b), or to the equitable doctrines of “marshaling” or any similar claim or doctrine with respect to any DIP Collateral, DIP Obligations or collateral securing the Revolving Loan Debt and other prepetition obligations.

Lien Validation and Perfection: All liens authorized and granted pursuant to the Interim Order or the

Final Order entered by the Bankruptcy Court approving the DIP Facility or with respect to adequate protection shall be deemed effective and perfected as of the Petition Date, and no further filing, notice or act will be required to effect such perfection.

The Debtors shall stipulate in the Interim Order and Final Order that (i)

CNH’s liens securing the Revolving Loan Debt obligations are valid, perfected, encumber all assets of the Debtors, and have first priority subject only to the prior lien in favor of Term Loan Lenders in the Term Loan Priority Collateral, and (ii) none of the Debtors possesses any defenses, claims, offsets or any other type of cause of action against the Revolving Loan Lender or Term Loan Lenders which would impair, in any manner, the Revolving Loan Lender’s or Term Loan Lenders’ liens against the Debtors’ assets, the obligations of the Debtors to CNH under the Revolving Loan Documents, or the obligations of the Debtors to the Term Loan Lenders under the Term Loan Documents. The Debtors’ stipulations shall be binding upon all parties in interest in the Chapter 11 Cases, including any committee that is appointed, unless (i) an adversary proceeding is filed (x) by any party-in-interest prior to the expiration of


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sixty (60) days after the Petition Date or (y) by the creditors’ committee, if formed, forty-five (45) days after its formation (the “Review Period”) against the DIP Lender or the Term Loan Lenders (as applicable) challenging the DIP Lender’s or the Term Loan Lenders’ liens (as applicable) or otherwise asserting estate claims against CNH or the Term Loan Lenders (as applicable), and (ii) a final, non-appealable judgment is entered against the Revolving Loan Lender or the Term Loan Lenders (as applicable) in such adversary proceeding; provided, however, any party-in-interest that fails to file an adversary proceeding within the Review Period shall be forever barred from asserting any claims against the Revolving Loan Lender and/or the Term Loan Lenders (as applicable) on behalf of each Debtor’s estate, or challenging in any manner the Revolving Loan Lender’s or the Term Loan Lenders’ liens and claims (as applicable) against the Debtors.

Final DIP Financing Prior to providing any funding under the DIP Loan facility in excess of

$7,500,000, DIP Lender will require that the Bankruptcy Court approve a Final Order, following proper notice to all affected parties and as otherwise required under the Bankruptcy Code, that reaffirms all provisions of the Interim Order. The Final Order shall include, among other terms and provisions, court approved stipulations of the Borrowers ratifying and reaffirming all of the prepetition Revolving Loan Debt and all prepetition Liens securing such Revolving Loan Debt and providing comprehensive releases of the DIP Lender. The Final Order shall be entered within 25 days of the Petition Date.

Interest Rate: The Prime Rate plus 7.5% of outstanding DIP Revolving Obligations (the

“Non-Default Interest Rate”). “Prime Rate” means the rate of interest quoted from time to time by Wells Fargo Bank as its prime rate or a comparable reference rate designated by DIP Lender.

Effective immediately upon the occurrence of an Event of Default

under the Revolving DIP Loan Documents, unless waived in writing by CNH, interest on the outstanding loans under the DIP Revolving Facility shall accrue at a rate that is 2% per annum in excess of the Non-Default Interest Rate.

Eligible Receivables: Eligible Receivables shall have substantially the same meaning as it does

under the Revolving Loan Agreement. Availability Formula: Borrowings under the Facility shall be subject to terms and restrictions as

set forth in the Revolving Loan Documents, including with respect to Eligible Receivables.

Fees: The following are the fees associated with the revolving line of credit.


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1. Facility Fee: Borrowers shall be obligated to pay DIP Lender a “Facility Fee” in an amount equal to one percent (1%) of the Facility Amount payable from the proceeds at closing.

2. Collateral Management fee: one half of one percent (.5%) per annum of the average outstanding loan balance to monitor and to service this loan and to monitor and manage collateral.

3. Processing Fees: $150 per wire for the first advance per week and $450 for any additional advance within same week.

4. Unused Line Fee: Borrowers shall pay DIP Lender an unused line fee of one half of one percent (.5%) per annum of the average unused portion of the DIP Revolving Facility.

5. Exit fee: Borrowers shall pay one percent (1%) of the Facility Amount upon the earlier of the Maturity Date and exit from bankruptcy.

6. Fees & Expenses: Borrowers shall pay all reasonable fees and expenses related to the underwriting, documentation, bankruptcy court approval, closing process, administration and enforcement of the loan, including without limitation the reasonable fees of loan documentation and bankruptcy counsel.

Financial Covenants: Compliance with the Budget subject only to Budget Variances.

Release of Claims: In consideration of the furnishing of the DIP Revolving Facility, each of the Debtors, subject to the rights of another party to bring a Challenge Action during the Review Period, and upon entry of the Final Order, hereby absolutely releases and forever discharges each of the Revolving Loan Lender and its affiliates, officers, directors, employees, attorneys, and other representatives from any and all claims and causes of action of every kind and nature that any Debtor may hold against such released parties.

Diligence and Review: Approval of the financing is premised on a satisfactory review of Borrowers’ financial projections, budgets, other sources of funding, including an adequate DIP Term Facility from the DIP Term Lender and all documentation related thereto, and other documents that DIP Lender, in its sole discretion, deems necessary. A good faith deposit of $30,000 (the “Deposit”) will be due at the execution of this document. The Deposit shall be applied to the costs of the DIP Lender, including reasonable legal fees, whether or not the transactions contemplated by this term sheet close or are abandoned by the parties. In the event that the transactions do not close, the DIP Lender shall apply the Deposit to all outstanding costs and expenses and shall return the remainder of the Deposit to Borrowers.

Conditions Precedent to Initial


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DIP Term Facility Advance: The closing of the DIP Revolving Facility shall be subject to (a) approval of the Interim Budget (as defined below) by the Bankruptcy court and by CNH, together with all financial information and projections regarding the Debtors requested by CNH, all in form and substance satisfactory to CNH in its sole discretion, (b) entry of an Interim Order and the Final Order approving the DIP Facility, the superpriority administrative claims and all first priority and other liens securing the DIP Facility, and containing such other orders and findings as CNH may require, including automatic modification of the automatic stay upon the occurrence of an Event of Default enabling CNH to exercise certain rights and remedies against the DIP Collateral, which Interim Order or Final Order, as applicable, shall not have been modified or amended without approval of CNH, and shall not have been reversed, vacated or stayed pending appeal, in form and substance satisfactory to CNH in its sole discretion, (c) CNH’s approval of all material motions and orders filed in the Chapter 11 Cases requiring the expenditure of cash, and (d) continuation of Debtors’ present cash management system.

Additional Conditions to Each Borrowing Under the DIP Revolving Facility: The funding of each DIP Revolving Facility advance shall be subject to the

following conditions precedent, among others: (a) There shall exist no Event of Default (or event that would constitute an Event of Default with the giving of notice or lapse of time) under any of the Revolving DIP Loan Documents, and the representations and warranties therein shall be true and correct in all material respects; (b) there shall have occurred no material adverse change in the Debtors’ operations (financial, environmental, or otherwise), performance, or properties (other than as a result of the commencement of the Chapter 11 Cases), since the date of this term sheet, that has or could be expected to have a Material Adverse Effect on the rights and remedies of CNH or on the ability of any Debtor to perform its obligations under the DIP Facility; (c) compliance with Bankruptcy Rule 4001 and any applicable Local Bankruptcy Rules, the entry of the Interim Order and the Final Order (as applicable), together with any other order requested by CNH authorizing and approving the DIP Revolving Facility in form, substance and amount and providing for the DIP Collateral, all acceptable to CNH in its sole discretion; (d) payment of all fees and expenses owing to CNH in connection with the DIP Revolving Facility; (e) CNH shall be reasonably satisfied that Debtors are continuing to take action and demonstrating progress toward the Milestones; (f) the Revolving DIP Loan Documents and the Interim and Final Orders shall include such waivers, indemnities, and other provisions as are acceptable to CNH in its sole discretion; and (g) CNH shall be reasonably satisfied that Debtors are continuing to take action and demonstrating progress toward the Milestones.

Affirmative


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And Negative Covenants: The Debtors shall comply with the following affirmative and negative

covenants, among others: (a) compliance with Budget covenants consistent with the section titled “Budget and Variances,” (b) the Debtors shall, from and after the Petition Date, satisfy the Milestones; and (c) the Debtors shall, contemporaneously with closing a sale of substantially of all of its assets, remit the net proceeds of such sale to CNH for immediate application to the obligations owed to CNH as the Revolving Loan Lender and the DIP Lender in accordance with the Intercreditor Agreement and waterfall set forth in the Revolving Loan Documents, and subject to payment of the Carve Out; and (d) no Debtor shall take (or refrain from taking) any action that could reasonably be expected to have a Material Adverse Effect.

Bankruptcy Court Filings: As soon as practicable in advance of filing with the Bankruptcy Court, the Debtors shall furnish to CNH (i) the motion seeking approval of and proposed forms of the Interim Order and the Final Order, which motion shall be in form and substance satisfactory to CNH in its sole discretion, (ii) the motions seeking approval of the bidding procedures and the 363 Sale, and the proposed forms of the orders related thereto, which shall be in form and substance satisfactory to CNH, (iii) all other proposed orders and pleadings related to the DIP Term Facility or DIP Revolving Facility, which orders and pleadings shall be in form and substance satisfactory to CNH in its sole discretion, (iv) any plan of reorganization or liquidation, and/or any disclosure statement related to such plan (which plan or disclosure statement shall comply with the requirements set forth herein), which shall be in form and substance satisfactory to CNH in its sole discretion, (v) any motion and proposed form of order seeking to extend or otherwise modify the Debtors’ exclusive periods set forth in section 1121 of the Bankruptcy Code, (vi) any motion seeking approval of any sale of any Debtor’s assets and any proposed form of a related bidding procedures order and sale order (other than those with respect to the bidding procedures and the 363 Sale), and (vii) any motion and proposed form of order filed with the Bankruptcy Court relating to any management equity plan, incentive plan or severance plan, the assumption, rejection, modification or amendment of any material contract (each of which must be in form and substance satisfactory to CNH in its sole discretion).

Sale Process: The Debtors shall conduct a sale process for the sale of substantially all of the assets of the Debtors in accordance with the Milestones defined below.

The management team of the Debtors, together with the Investment Banker, shall oversee the sale process on behalf of the Debtors, including all activities of any advisors retained by the Debtors in connection with the sale process. The Debtors and the Investment Banker shall exercise their commercially reasonable best efforts to provide CNH with access to all


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potential bidders and other interested parties and any information provided to the Debtors by such parties.

In addition to the reporting required under the Revolving Loan Documents, the Debtors shall provide or cause to be provided to CNH a written report from the Investment Banker or the management team of the Debtors bi-weekly (or more frequently as reasonably requested by CNH) in form and substance satisfactory to, and addressing such items as are reasonably requested by CNH, including addressing the status of the marketing and sale process of the Debtors. The Debtors shall also cause their management team and the Investment Banker to be made available to provide periodic telephonic updates of such reports to CNH from time to time (but not less than weekly), as reasonably requested by CNH. CNH shall receive any and all reports and information provided to the DIP Term Lender and/or the Term Loan Lenders at the same time such information and/or reports are provided to the DIP Term Lender and/or the Term Loan Lenders.

Milestones. The Debtor shall be required to comply with the sale timetable set forth below (the “Milestones”), provided, however, that the Milestones are subject to acceleration or modification based upon the terms of subsequent offers received for the purchase of substantially all of the Debtors’ assets:

(a) Within one day of the Petition Date, or such later date to which CNH consents in writing in its sole discretion, the Debtors shall file a motion, in form and substance satisfactory to CNH, requesting entry of the Sale Procedure Order;

(b) on or before the date that is twenty-five (25) days after the Petition Date, or such later date to which CNH consents in writing in its sole discretion, the Bankruptcy Court shall have entered the Sale Procedure Order;

(c) on or before the date that is forty-eight (48) days after the Petition Date, or such later date to which CNH consents in writing in its sole discretion, the Debtors shall have held the Auction;

(d) on or before the date that is fifty (50) days after the Petition Date, or such later date to which CNH consents in writing in its sole discretion, the Bankruptcy Court shall have entered the Sale Order approving the 363 Sale, the results of the Auction, and the winning bid received at the Auction;

(e) on or before the date that is sixty (60) days after the Petition Date, provided that the Bankruptcy Court has waived the stay imposed by Bankruptcy Rule 6004(h), or such later date to which CNH consents in


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writing in its sole discretion, the Sale shall be closed, with the proceeds of the Sale paid directly to CNH as set forth herein. ]

Notwithstanding anything to the contrary herein, the Bankruptcy Court may set dates with respect to the Milestones beyond the outer dates specified above to accommodate its own schedule and to the extent the Bankruptcy Court makes such an extension, the Milestones hereunder shall be automatically extended by the same period as the Bankruptcy Court’s extension.

CNH shall have the right to “credit bid” any secured obligations owed to it in any sale of any Debtor’s assets.

Remedies: Following the Termination Date and provided that the Bankruptcy Court does not enter any order to the contrary within five Business Days’ following the Debtors’ receipt of a Default Notice as defined below, CNH shall have customary remedies, including, without limitation, the right to realize on all DIP Collateral, the right to exercise any remedy available under applicable law, without the necessity of obtaining any further relief or order from the Bankruptcy Court. Consistent with the foregoing sentence, section 362 relief from the stay in favor of CNH shall be embodied in any order approving the DIP Facility and the use of cash collateral.

Events of Default: Defaults and Events of Default shall mean the occurrence of any of the following:

• James Fleet, or another Chief Restructuring Officer acceptable to CNH in its sole discretion, shall cease to be engaged by the Debtors.

• Any Chapter 11 Case shall be converted to a case under Chapter 7 of the Bankruptcy Code or be dismissed or a motion requesting such relief shall have been filed.

• Filing or support of a proposed plan of reorganization by any Debtor that does not provide for the indefeasible payment in full and in cash of Debtors’ obligations outstanding under the DIP Facility, unless otherwise agreed in writing by CNH in its sole discretion.

• Entry of an order confirming (or the filing of any motion or pleading requesting confirmation of) a plan of reorganization that does not require the indefeasible repayment in full, in cash of the DIP Facility as of the effective date of the plan, unless otherwise agreed in writing by CNH in its sole discretion.

• Appointment of a trustee under Section 1104 of the Bankruptcy Code without the express written consent of CNH, or the filing of any motion or other pleading requesting such relief which the Debtors fail to timely oppose.

• Appointment of an examiner with enlarged powers (powers beyond those set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code without the prior written consent of CNH, or the filing of a motion or other pleading requesting such relief which the Debtors fail to timely oppose.


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• Entry of an order by the Bankruptcy Court amending, supplementing, staying, vacating or otherwise modifying the DIP Facility, the Interim Order or Final Order approving the DIP Facility, without the prior written consent of CNH or the filing of a motion or other pleading requesting such relief which the Debtors fail to timely oppose.

• Any attempt by any Debtor to obtain, or if any other party in interest obtains, an order of the Bankruptcy Court or other judgment, and the effect of such order or judgment is to, invalidate, reduce or otherwise impair CNH’s claims, or to subject any of CNH’s collateral to a surcharge pursuant to Section 506(c) of the Bankruptcy Code.

• Any Debtor shall request approval of any postpetition financing, other than the DIP Facility, that would not immediately repay all DIP Facility obligations, in full, in cash, on the date of the closing of such postpetition financing.

• Any Debtor shall apply for an order substituting any assets for all or any portion of the DIP Collateral.

• Entry of an order granting liens or claims that are senior or pari passu to the liens granted in favor of CNH as the DIP Lender under the Revolving DIP Loan Documents.

• Any party in interest (including the Debtor) shall assert that any of the DIP Liens are invalid, or any DIP Liens granted to the DIP Lender shall be determined to be invalid.

• Any payment on, or application for authority to pay any pre-petition claim owing to terminated employees or lease rejection damages without prior written consent of CNH or as otherwise set forth in the Budget.

• If at any time, the Investment Banker ceases to be engaged by the Debtors, ceases to be involved in the sales process, or the sales process is halted without CNH’s consent.

• A final order is entered granting any creditor with a claim in excess of $100,000 relief from the automatic stay.

• Failure to make all payments under the DIP Facility when due. • Failure to pay any post-petition material indebtedness. • Breach of any covenant set forth in any Revolving DIP Loan Documents. • Breach of any covenant set forth in any DIP Term Facility document or agreement. • Any material representation or warranty by any Debtor is incorrect or misleading in

any material respect when made. • Exclusivity shall have been terminated or any Debtor shall have agreed to any such

termination. • After entry thereof, either of the Sale Procedure Order or the Sale Order shall cease to

be in full force and effect, shall have been reversed, stayed, vacated or subject to stay pending appeal or shall have been modified or amended without the prior written consent of CNH.

• The “Stalking Horse” bidder designated in the motion seeking approval of the Sale Procedures Order shall drop out of the sale process or otherwise indicate that it is unable to close the sale process within sixty (60) days of the Petition Date.

• Any Debtor shall take (or support any other Person in taking) any action in order to restrict or prohibit CNH from submitting a “credit bid” for any assets of any Debtor.

• Any Challenge Action (as such term is defined in the Interim or Final Order approving the DIP Facility) is commenced against the Revolving Loan Lender.


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• The commencement of an action or filing of a motion challenging the rights and remedies of the DIP Lender under the Revolving DIP Loan Documents or that is otherwise inconsistent with the Revolving DIP Loan Documents.

• The Debtor fails to disburse the sale proceeds to the DIP Lender contemporaneously with the closing of a sale of substantially all of their assets, subject to payment of the Carve Out.

Indemnification: The Debtors shall indemnify and hold CNH and its officers, directors, employees and agents (including all of their professionals) (each an “Indemnified Party”) harmless from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, all fees and disbursements of attorneys and other professionals) to which any Indemnified Party may become liable or which may be incurred by or asserted against any Indemnified Party, in each case in connection with or arising out of or by reason of any investigation, litigation or proceeding arising out of or relating to or in connection with the DIP Facility, the Revolving DIP Loan Documents, any obligation, or any act, event or transaction related or attendant thereto or any use or intended use of the proceeds of the DIP Facility, except to the extent the same is found in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence, willful misconduct or intentional fraud. The indemnification terms and conditions of the Revolving Loan Documents are hereby incorporated in this term sheet.

In no event, however, shall any Indemnified Person be liable on any theory of liability for any special, indirect, consequential or punitive damages.

Governing Law: All documentation in connection with the DIP Facility shall be governed by the laws of the state of New York, subject to applicable federal bankruptcy laws.

Other Definitions: “363 Asset Purchase Agreement” means a Third-Party Asset Purchase Agreement satisfactory to CNH, in its sole discretion. “363 Sale” means the sale of all or substantially all of the assets of the Debtor under Section 363 of the Bankruptcy Code. “Approved Budget Variance Report” means a current report that: (i) details the actual amount of cash receipts and disbursements for the prior week for each line item included in the Budget (on a weekly and cumulative basis), (ii) compares such actual cash receipts and disbursements (on a line item by line item basis) with the weekly and cumulative budgeted amounts for each such line item set forth in the Budget for such period, and (iii) provides an explanation for all variances between budgeted and actual amounts. Each Approved Budget Variance Report will be certified as true and correct by the Debtors’ chief financial officer or chief executive


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officer. “Auction” means an auction held in connection with the 363 Sale and in accordance with the provisions set forth in the Sale Procedure Order. “Avoidance Actions” means any causes of action that could be brought under §§ 544-548 of the Bankruptcy Code or any applicable state fraudulent-transfer statute or similar statute. “Avoidance Proceeds” means the proceeds received from, or property recovered in respect of, Avoidance Actions. “Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et seq.), as amended. “Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of New York presiding over the Chapter 11 Cases. “Budget” means the budget of Debtor relative to the operations of the Debtors in the Chapter 11 Cases for any fiscal period, as delivered to CNH in form and substance satisfactory to CNH. A Budget for the first 8 weeks of the Chapter 11 Cases (the “Interim Budget”) must be approved by CNH and must be attached to the Interim Order. A Budget covering the period from the date of entry of the Final Order through the Maturity Date must be delivered by the Debtor to CNH (and approved by CNH in its sole discretion) at least two Business Days before any hearing related to final approval of the DIP Facility and must be attached to the Final Order. “Carve Out” means: (a) unpaid, postpetition fees and expenses of the Clerk of the Court and the U.S. Trustee pursuant to 28 U.S.C. § 1930(a) (collectively, the “Statutory Fees”); (b) the unpaid postpetition fees and expenses of the professionals retained by the Debtor and by the Committee (if any), whose retentions are approved pursuant to final orders of the Court under sections 327, 328, 363 or 1103(a) of the Bankruptcy Code (the “Chapter 11 Professionals”), but only to the extent that such fees and expenses are (i) incurred prior to a Termination Event, (ii) within the amounts set forth in the Budget approved by CNH, provided, however, that any amount of fees paid from a retainer held by a professional shall be in addition to, and shall not count against, the amounts in the Budget for purposes of the “Carve-Out”, and (iii) subsequently allowed by the Bankruptcy Court under sections 330, 331, or 363 of the Bankruptcy Code; and (c) postpetition fees and expenses of the Chapter 11 Professionals incurred after the occurrence of a Termination Event in an aggregate amount not to exceed


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$100,000, to the extent such fees and expenses are (i) subsequently allowed by the Bankruptcy Court under sections 330, 331, or 363 of the Bankruptcy Code, and (ii) not otherwise paid from any retainers or any other professional expense escrow account established by the Debtor. Provided, however, that (a) the Carve Out shall only be available to pay fees and expenses set forth herein to the extent that unencumbered funds are not otherwise available; and (b) in no event shall the Carve-Out for each Chapter 11 Professional exceed the amounts for postpetition fees set forth for such professional in the Budget as of the applicable date of determination. The Carve Out shall not include payment for any fees and expenses, if any, of the Chapter 11 Professionals incurred directly or indirectly, in respect of, arising from or relating to: (i) the initiation, joinder, support, or prosecution of any action contesting the indebtedness owed to CNH as the Revolving Loan Lender or as the DIP Lender, or the validity of any liens granted to CNH, as the Revolving Loan Lender or as the DIP Lender; (ii) preventing, hindering or otherwise delaying (or supporting any other person or entity in preventing, hindering or otherwise delaying), whether directly or indirectly, the exercise by CNH as the Revolving Loan Lender or as the DIP Lender of any of its rights and remedies under the Interim Order, Final Order, the Revolving Loan Documents or documents comprising the DIP Facility; (iii) the commencement, support, or prosecution of any action or proceeding of any claims, causes of action or defenses against CNH, as the Revolving Loan Lender or the DIP Lender, the Term Loan Lenders or the DIP Term Lender or any of their respective officers, directors, employees, agents, attorneys, affiliates, successors or assigns, including, without limitation, any attempt to recover or avoid any claim or interest from CNH, the DIP Lender, the Term Loan Lenders or the DIP Term Lender; (iv) any request to borrow money other than pursuant to the terms of the Interim Order, the Final Order, or the DIP Facility; (v) with respect to any Debtor, any of the Debtors’ Chapter 11 Professionals, or any of their successors or assigns (including, without limitation, any trustee, responsible officer, examiner, estate administrator or representative or similar person appointed in a case for the Debtor under any chapter of the Bankruptcy Code) performing or commencing any investigation or litigation (whether threatened or pending) by the Debtor with respect to any matter released or to be released, waived, or to be waived, or specified as not subject to challenge by the Debtor pursuant to the Interim Order or Final Order; or


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(vi) for any other purpose for which proceeds of the DIP Facility may not be used pursuant to this DIP Term Sheet. “Chapter 11 Cases” means the voluntary Chapter 11 cases commenced by the Debtors to be commenced in the Bankruptcy Court. “Committee” means any statutory committee appointed in the Chapter 11 Cases. “Final Order” means a final, non-appealable order of the Bankruptcy Court, that, without limitation, approves the DIP Facility and grants the liens and security interests contained therein, on terms satisfactory to CNH in its sole discretion. “Intercreditor Agreement” means that certain Amended and Restated Intercreditor Agreement, by and between CNH and the Revolving Loan Lender, dated on or about May 11, 2017. “Interim Order” means an interim order of the Bankruptcy Court authorizing Debtors, among other things, to obtain interim financing and incur post-petition indebtedness on terms satisfactory to CNH in its sole discretion. “Investment Banker” means Raymond James. “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties, liabilities (actual or contingent) or condition (financial or otherwise) of any Debtor; (b) a material impairment of the Liens, rights or remedies of CNH as Revolving Loan Lender or DIP Lender under any of the Revolving DIP Loan Documents or the Revolving Loan Documents, (c) a material impairment of any Debtor to perform any of its obligations under the DIP Facility or the related documents and agreements, or (d) a material adverse effect upon the legality, validity, binding effect, or enforceability against any Debtor of any of Revolving DIP Loan Documents or the Revolving Loan Documents, or any of the Term Loan Documents or the documents and agreements evidencing the DIP Term Facility. “Maturity Date” means the date that is sixty (60) days after the Petition Date, or such later date to which CNH consents in writing. “Petition Date” means the date on which the Chapter 11 Cases for the Debtors was filed with the Bankruptcy Court. “Revolving DIP Loan Documents” means collective agreement(s) between the Debtors and Revolving Loan Lender regarding the provision of the DIP Revolving Facility, including the Revolving DIP Loan Agreement. “Revolving Loan Lender” means CNH.


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“Revolving Loan Agreement” has the meaning ascribed to it in the Intercreditor Agreement. “Revolving Loan Documents” has the meaning ascribed to it in the Intercreditor Agreement. “Sale” means a sale of all or substantially all of the Debtors’ assets. “Sale Order” means the order entered by the Bankruptcy Court in form and substance satisfactory to CNH (in its sole discretion) that, among other things, approves the 363 Sale, the results of the Auction (if applicable) and the Winning Bidder’s bid. “Sale Procedure Order” means an order in form and substance satisfactory to CNH approving (a) the bidding procedures to be applicable to the 363 Sale and (b) subject to higher and better bid, the 363 Asset Purchase Agreement. “Third-Party Asset Purchase Agreement” means an asset purchase agreement by and among the Debtors and a third party purchaser that provides for the purchase and sale of substantially all of the assets of the Debtors, which third party purchaser and asset purchase agreement are satisfactory to CNH in its sole discretion. “Winning Bidder” means the bidder that (a) agrees (at the Auction if applicable) to purchase all or substantially all of the assets of the Debtors pursuant to a Third-Party Asset Purchase Agreement, and (b) is acceptable to CNH.

The terms of the Facility as set forth herein are for discussion purposes only and this term sheet does not imply in any way a commitment by CNH to enter into the Facility or to submit the Facility to CNH’s credit committee for approval. CNH may terminate its review of the Facility at any time in its sole discretion. CNH will make the loans summarized above only upon further due diligence and underwriting of the transaction, approval through CNH’s credit approval process, CNH’s continuing satisfaction with the financial and business conditions of the Borrowers and their principals, and receipt of documentation and assurances satisfactory to CNH and its legal counsel. This term sheet does not purport to specify all of the terms, conditions, representations and warranties, covenants and other provisions that will be contained in the final financing documents for the Facility, if approved by CNH. The Facility shall be subject to such other terms, covenants and conditions as CNH deems appropriate in its sole discretion. This term sheet is being delivered in reliance that all information provided to DIP Lender is and will be accurate and complete. The contents of this term sheet may not be shared with any third party without CNH’s prior written consent, except for management and regulatory bodies on a need-to-know basis. All persons who are informed of the contents of this term sheet also need to be informed that such contents are confidential and cannot be disclosed without CNH’s prior written consent.


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Notwithstanding anything else contained herein, each Borrower hereby expressly agrees to be bound by the provisions of this term sheet relating to confidentiality, exclusivity and expense reimbursement. This term sheet supersedes all previous discussions, communications and proposals relating in any way to the Facility and shall expire if not executed by Borrowers and returned to CNH by 5:00 p.m. ET on August 17, 2018. CNH hereby notifies each Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”) and CNH’s policies and practices, CNH is required to obtain, verify and record certain information and documentation that identifies each Borrower, which information includes the name and address of each Borrower and such other information that will allow CNH to identify each Borrower in accordance with the Act.

[Continues on Following Page] We appreciate the opportunity to furnish this proposal to you. If you have any questions, please do not hesitate to call. Sincerely,

CNH Finance Fund I, L.P.

____________________________ Timothy Peters Principal


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Accepted and agreed by their duly authorized officers as of the date first set forth above.

BORROWERS: HOOPER HOLMES, INC., a New York corporation By: Name: Title: PROVANT HEALTH SOLUTIONS, LLC, a Rhode Island limited liability company By: Name: Title: HOOPER WELLNESS, LLC, a Kansas limited liability company By: Name: Title: ACCOUNTABLE HEALTH SOLUTIONS, LLC, a Kansas limited liability company By: Name: Title: HOOPER INFORMATION SERVICES, INC., a New Jersey corporation By: Name:


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Title: HOOPER DISTRIBUTION SERVICES, LLC, a New Jersey limited liability company By: Hooper Holmes, Inc., its Manager By: ______________________________ Name: Title: HOOPER KIT SERVICES, LLC, a Kansas limited liability company By: Hooper Holmes, Inc., its sole Member By: ____________________________ Name: Title:


EXHIBIT 3

DIP Term Loan Agreement


#59474357_v8

Hooper Holmes, Inc. Terms and Conditions of

Proposed Senior Secured, Super-Priority Debtor-in-Possession Credit Facility

The terms outlined below in this Terms and Conditions (this “DIP Term Sheet”) are the terms and conditions for a senior secured, super-priority debtor-in-possession credit facility (hereinafter referred to as the “DIP Term Facility”) to be made available to the Debtors (as defined below). This DIP Term Sheet, the Interim Order (as defined below), and the Final Order (as defined below) shall collectively constitute the exclusive and definitive documentation and agreement among the parties for the DIP Facility (the “DIP Term Financing Documents”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in that certain Amended and Restated Credit Agreement by and among the DIP Lender and Debtor, dated as of May 11, 2017 (as may be modified, amendment or restated from time to time, the “Pre-Petition Credit Agreement”.) Borrowers/Debtors: (i) Hooper Holmes, Inc.

(ii) Hooper Wellness, LLC (iii) Accountable Health Solutions, LLC (iv) Hooper Distribution Services, LLC, (v) Hooper Information Services, Inc. (vi) Hooper Kit Services, LLC (vii) Provant Health Solutions, LLC (each a “Debtor” and collectively, the “Debtors”)

Amount and Type of Facility: After entry of the Interim Order (as defined below), the DIP Term Facility will consist of a consolidated term loan (the “DIP Term Facility”) in the aggregate principal amount of $1,600,000 (the “Term Loan Commitment”), which, upon entry of the Final Order, will be inclusive of any amounts advanced under the Pre-Petition Credit Agreement from and after the date of the 5th amendment to the Pre-Petition Credit Agreement. In addition to the DIP Term Facility, the Debtors will also obtain a revolving postpetition credit facility, which will be furnished by the Revolving Lender on terms and conditions set forth in separate, Revolving DIP Loan Documents between the Debtors and Revolving Lender (the “DIP Revolving Facility”). The DIP Term Facility and DIP Revolving Facility shall be referred to herein collectively as the “DIP Facility”.

Agent:

SWK Funding LLC (“SWK”).

DIP Lender: SWK Funding LLC (the “DIP Lender”).

Borrowing Availability:

All new advances under the DIP Term Facility shall be limited by the Budget, unless the Termination Date shall have occurred before any such date:


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Availability under the DIP Term Facility may be reduced by reserves as may be established by SWK in its reasonable discretion from time to time to reflect, among other things, contingencies or risks that may materially impact the DIP Collateral, the liens of SWK, or the business and operations of the Debtors.

Budget and Variances: Subject to the Budget Variances (as defined below), (i) the Debtors’ total budgeted, aggregate cash receipts and cash disbursements (excluding fees and expenses of third party professionals engaged by or for the benefit of Debtors or the DIP Lender (collectively, “Professional Fees”)) shall each be adhered to, on a weekly basis and a cumulative basis for the Budget (as defined below) period then ending as described below, and (ii) the Debtors’ disbursements for Professional Fees (which shall be reported in a manner so that Professional Fees for each retained professional shall be reflected on its own line item) shall be adhered to on a cumulative basis for that portion of the Budget period then ending, except as to the DIP Lender’s and Revolving Lender’s Professional Fees (which DIP Lender and Revolving Lender Professional Fees shall not be limited by the Budget). Actual amounts for aggregate cash receipts and aggregate cash disbursements (which shall not and does not include any Professional Fees) within the Budget may not vary from the applicable Budgeted amounts for such items by (i) more than ten percent (10%) on a weekly basis; or (iii) ten percent (10%) on a cumulative basis for that portion of the Budget period then ended (collectively, the “Budget Variances”). Although fees incurred by professionals retained by SWK and the Revolving Lender are not limited by the Budget: (i) No DIP Term Facility advances shall be used to pay any fees, costs, or expenses of professionals the Revolving Lender in excess of the amounts set for such professionals set forth in the Budget; and (ii) No DIP Revolving Facility advances shall be used to pay any fees, costs, or expenses of professionals of SWK in excess of the amounts set forth for such professionals set forth in the Budget On or before the third business day of each week, commencing with the first week following the Petition Date, the Debtors shall deliver to SWK an Approved Budget Variance Report. The Debtors’ shall provide SWK with an updated budget not later than three weeks after the Petition Date, and every three weeks thereafter, and such updated budget(s), in each case in form and substance satisfactory to SWK, once approved by SWK, shall become the Budget for all purposes going forward


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hereunder until a subsequent budget is submitted and approved by SWK. In the event that the Debtors fail to comply with the Budget Variances in any week, the Debtors’ obligation to provide updated budget(s) shall then become a weekly obligation.

Fees: The Debtors shall pay all fees and other charges payable in the amounts and at the times as set forth in the Pre-Petition Credit Agreement in relation to the full amount of the Term Loan Commitment, other than any exit or origination fees set forth in the Pre-Petition Credit Agreement. The Debtors shall also pay to SWK an origination fee upon the closing of the DIP Term Facility equal to two percent (2%) of all new funds advanced pursuant to the DIP Term Facility. The Debtors also agree to pay the costs and expenses of SWK as set forth in the Section titled “Agent Fees and Expenses” below.

Termination Date: The earliest to occur of: (a) the Maturity Date (as defined below); (b) twenty-five (25) days after the Petition Date (as defined below) if the Final Order has not been entered; (c) acceleration of the obligations under the DIP Term Facility or DIP Revolving Facility due to an Event of Default; (d) the effective date of a confirmed plan of reorganization or liquidation that provides for indefeasible payment in full, in cash of all obligations owing under the DIP Facility or is otherwise acceptable to SWK in its sole discretion; (e) the date which is the closing date of any sale of all or substantially all of the Debtors’ assets; (f) the entry of an order by the Bankruptcy Court (as defined below) (i) granting relief from the automatic stay permitting foreclosure of any assets of any Debtor with a value in excess of $100,000 in the aggregate, (ii) granting any motion by SWK or the Revolving Lender to terminate the use of cash collateral or lift the stay or otherwise exercise remedies against any cash collateral, (iii) appointing a trustee or an examiner with special powers, or (iv) dismissing or converting any of the Chapter 11 Cases (as defined below); (g) the filing or support by any Debtor of a plan of reorganization that (i) does not provide for indefeasible payment in full, in cash of all obligations owing under the DIP Facility and (ii) is not otherwise acceptable to SWK in its sole discretion; (h) entry of a Bankruptcy Court order granting liens or claims that are senior or pari passu to the liens securing the DIP Facility, and (i) the date of termination or acceleration of the DIP Revolving Facility. The date on which the earliest of clauses (a) through (i) above occurs and SWK provides notice thereof to the Debtor being referred to hereinafter as the “Termination Date.” On the Termination Date, the DIP Term Facility shall be deemed terminated, and SWK shall have no further obligation to provide financing pursuant to the DIP Term Facility or DIP


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Term Financing Documents.

Non-Default Interest Rate and Payment Terms:

Interest on all outstanding advances under the DIP Term Facility shall accrue from and after the Petition Date at a per annum floating rate equal to the non-default rate in place under the Pre-Petition Credit Agreement immediately before the Petition Date (the “Non-Default Interest Rate”). Interest with respect to any outstanding obligations under the Pre-Petition Credit Agreement shall, to the extent permitted by applicable bankruptcy law, accrue from and after the Petition Date at the Non-Default Interest Rate and be due and payable by the Debtors on the date that the full amount of the DIP Facility is immediately due and payable.

Default Interest Rate And Letter of Credit Fees:

Effective immediately upon the occurrence of an Event of Default unless waived in writing by SWK, interest on the outstanding loans under the DIP Term Facility shall accrue at a rate that is 3% per annum in excess of the Non-Default Interest Rate.

Loan Payments: Each Debtor promises and agrees, jointly and severally, to pay to SWK and the DIP Lender all DIP Term Facility advances, together with interest thereon accruing pursuant to the DIP Term Financing Documents, in full, in cash, at the times set forth in the DIP Term Financing Documents, but no later than the Termination Date. All unpaid principal, interest, fees, costs and expenses on the DIP Term Facility shall be due and payable in full by the Debtors on the Termination Date, whether at maturity, upon acceleration or otherwise.

Use Of Proceeds: Proceeds of the DIP Facility shall be used solely for the following purposes (and to the extent identified in the Budget): (a) to fund, after application of all other available cash, post-petition operating expenses and working capital needs of the Debtors, including, but not limited to, those activities required to remain in, or return to, compliance with laws in accordance with 28 U.S.C. § 1930; (b) to pay interest, fees and expenses to SWK in accordance with this DIP Term Sheet (whether or not such amounts are reflected in the Budget); (c) to fund fees and expenses incurred in connection with the 363 Sale (as defined below); (d) to pay permitted pre-petition claim payments and adequate protection payments, if any; (e) to pay Professional Fees provided for in the Budget (subject to all limitations set forth herein); and (f) to pay certain other costs and expenses of administration of the Chapter 11 Cases. Proceeds of the DIP Term Financing Documents or cash collateral shall not be used (a) to permit any of the Debtors, or


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any other party-in-interest or their representatives to challenge or otherwise contest or institute any proceeding to determine (i) the validity, perfection or priority of security interests in favor of the Revolving Lender, SWK, the Pre-Petition Agent, the Pre-Petition Lenders or the DIP Lender, (ii) the enforceability of the obligations of any Debtor or any guarantor under the Pre-Petition Credit Agreement, any other Pre-Petition Loan Documents, or the DIP Facility, or (iii) the enforceability of the obligations of any Debtor or any guarantor to the Revolving Lender under the Revolving Loan Documents, (b) to investigate, commence, prosecute or defend (or support any other person or entity in investigating, commencing, prosecuting, or defending) any claim, motion, proceeding or cause of action against the Revolving Lender, SWK, the Pre-Petition Agent, the Pre-Petition Lenders, or the DIP Lender or any of their agents, attorneys, advisors or representatives including, without limitation, any lender liability claims or subordination claims, (c) to investigate, commence, prosecute or defend (or support any other person or entity in investigating, commencing, prosecuting, or defending) any claim or proceeding or cause of action to disallow or challenge the obligations of any Debtor or guarantor under the Revolving Loan Documents, Pre-Petition Credit Agreement, any other Pre-Petition Loan Documents, or the DIP Term Financing Documents, or (d) to fund acquisitions, capital expenditures, capital leases, or any other similar expenditure other than capital expenditures specifically set forth in the Budget and approved by SWK, provided that a Committee (if any) and its professionals shall be permitted to use proceeds in an amount not to exceed $25,000 to investigate the liens, claims, and potential causes of action against the Revolving Lender and Pre-Petition Lenders in connection with the Pre-Petition Credit Agreement and Revolving Loan Agreement.

Cash Management Collections and Remittances:

The Debtors shall use a cash management system that is the same as or substantially similar to their pre-petition cash management system. Any material changes from such pre-petition cash management system must be acceptable to SWK in its sole discretion. The Interim Order and Final Order shall provide the DIP Lender with a valid and enforceable lien and security interest on the cash held in the Debtors’ bank accounts, subject only to the relative priority provisions of the Intercreditor Agreement.

Pre-Petition Obligations: As of the date of this DIP Term Sheet, the Debtors owe certain obligations under the Pre-Petition Credit Agreement and other Pre-Petition Loan Documents. Each lender party to the Pre-Petition Credit Agreement is herein referred to collectively as the “Pre-Petition Lenders” and each individually a “Pre-Petition Lender”) and SWK, in its role as Agent for the Pre-Petition Lenders, is hereinafter referred to as the “Pre-Petition Agent.”


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Upon entry of the Final Order, the Debtors’ obligations to the Pre-Petition Lenders for advances made under the Pre-Petition Credit Agreement and other Pre-Petition Loan Documents (including accrued, unpaid interest from the Petition Date) from and after the fifth amendment of the Pre-Petition Credit Agreement shall be deemed obligations under the DIP Facility.

Super-Priority Administrative Claim:

Amounts owed by each Debtor to SWK pursuant to the DIP Facility (including all accrued interest, fees, costs and expenses) shall constitute, in accordance with Section 364(c)(1) of the Bankruptcy Code (as defined below), a claim having priority over any or all administrative expenses of the kind specified in, among other sections, Sections 105, 326, 330, 331, 503(b), 506(c), 507(a), 507(b) and 726 of the Bankruptcy Code (but pari-passu with any similar, super-priority administrative claim granted in respect of the DIP Revolving Facility), subject to payment of the Carve Out.

Collateral Security: The DIP Facility (including accrued interest, fees, costs and expenses) shall be secured by first priority senior and priming liens and security interests (the “DIP Term Liens”) in all of the Debtors’ property, but subject to the limitations set forth herein and in the Interim Order and Final Order, including, without limitation, all of Debtors’ existing and future acquired property and interests of any nature whatsoever, real and personal, tangible and intangible, accounts receivable, general intangibles, payment intangibles, supporting obligations, investment property, commercial tort claims, inventory, rolling stock, machinery, equipment, subsidiary capital stock, chattel paper, documents, instruments, deposit accounts, contract rights, and tax refunds of the Debtors, excluding only Avoidance Actions, but including, subject to entry of the Final Order, Avoidance Proceeds (collectively, the “DIP Collateral”). The DIP Term Lien shall be a first priority senior and priming lien upon the DIP Collateral, subject and junior only to: (1) With respect to DIP Collateral constituting Term Loan Priority Collateral (as such term is defined in the Intercreditor Agreement), (a) the Carve-Out, and (b) valid, enforceable, properly perfected, and unavoidable prepetition Liens (including any Liens that are perfected after the Petition Date that are afforded priority due to the express relation back of the perfection of such lien to a date prior to the Petition Date as permitted by Bankruptcy Code section 546(b)) that are senior to both the liens securing obligations under both the Revolving Loan Documents and Pre-Petition Loan Documents (“Senior Third Party Liens”); (2) With respect to DIP Collateral constituting Revolving Loan Priority Collateral (as such term is defined in


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the Intercreditor Agreement), (a) the Carve-Out, (b) Senior Third Party Liens, and (c) the liens securing the DIP Revolving Facility, and (d) the liens securing obligations under the Revolving Loan Documents, along with any adequate protection liens furnished in respect of such Revolving Loan Document obligations; (3) With respect to any DIP Collateral that arises after the Petition Date, would not fit within the definition of Revolving Loan Priority Collateral (as defined in the Intercreditor Agreement) or Term Loan Priority Collateral (as defined in the Intercreditor Agreement), and was not or could not have been subject to a lien prior to the Petition Date securing the obligations under the Revolving Loan Documents or Pre-Petition Loan Documents (such DIP collateral defined in this subsection (3), the “New DIP Collateral”), (a) the Carve-Out, but pari-passu with any liens of the Revolving Lender upon such New DIP Collateral.

Lien Validation and Perfection:

All liens authorized and granted pursuant to the Interim Order or the Final Order entered by the Bankruptcy Court approving the DIP Facility or with respect to adequate protection shall be deemed effective and perfected as of the Petition Date, and no further filing, notice or act will be required to effect such perfection. The Debtors shall stipulate in the Interim Order and Final Order that (i) SWK’s liens securing the Pre-Petition Credit Agreement and Pre-Petition Loan Document obligations are valid, perfected, encumber all assets of the Debtor, and have first priority subject only to the prior lien in favor of Revolving Lender in the “Revolving Loan Priority Collateral” (as defined in the Intercreditor Agreement) pursuant to the terms of the Intercreditor Agreement, and (ii) none of the Debtors possesses any claims, offsets or any other type cause of action against the Revolving Lender, Pre-Petition Agent, Pre-Petition Lenders, or SWK which would impair, in any manner, the Revolving Lender’s or SWK’s liens against the Debtors’ assets, the obligations of the Debtors to SWK under the Pre-Petition Credit Agreement and Pre-Petition Loan Documents, or the obligations of the Debtor to Revolving Lender under the Revolving Loan Documents. The Debtor’s stipulations shall be binding upon all parties in interest in the Chapter 11 Cases, including any committee that is appointed, unless (i) an adversary proceeding is filed (x) by any party-in-interest prior to the expiration of sixty (60) days after the Petition Date or (y) by the creditors’ committee, if formed, forty-five (45) days after its formation (the “Review Period”) against SWK or the Revolving Lender (as applicable) challenging the Revolving Lender’s or SWK’s liens (as applicable) or otherwise asserting estate claims against SWK or the Revolving Lender (as


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applicable), and (ii) a final, non-appealable judgment is entered against SWK or the Revolving Lender (as applicable) in such adversary proceeding; provided, however, any party-in-interest that fails to file an adversary proceeding within the Review Period shall be forever barred from asserting any claims against the Revolving Lender and/or SWK (as applicable) on behalf of each Debtor’s estate, or challenging in any manner the Revolving Lender’s or SWK’s liens and claims (as applicable) against the Debtors.

Release of Claims In consideration of the furnishing of the DIP Facility, each of the Debtors, subject to the rights of another party to bring a Challenge Action during the Review Period, and upon entry of the Final Order, hereby absolutely releases and forever discharges each of the Pre-Petition Agent and Pre-Petition Lenders and their affiliates, officers, directors, employees, attorneys, and other representatives from any and all claims and causes of action of every kind and nature that any Debtor may hold against such released parties.

506(c) Surcharge/Equities of Case Upon entry of the Final Order, the Debtors hereby waive any right to surcharge the prepetition collateral or DIP Collateral, whether pursuant to Bankruptcy Code sections 506(c) or 105(a) or under any other applicable law (other than the Carve Out set forth in the Final Order). Upon entry of the Final Order, SWK, the DIP Lender, the Pre-Petition Agent and the Pre-Petition Lenders shall not be subject to the “equities-of-the case” exception of Bankruptcy Code section 552(b), or to the equitable doctrines of “marshaling” or any similar claim or doctrine with respect to any DIP Collateral or collateral securing the Pre-Petition Credit Agreement and other Pre-Petition Loan Documents.

Adequate Protection: As adequate protection and in consideration for being primed by the DIP Lender’s claims and liens, the Pre-Petition Agent and Pre-Petition Lenders (a) shall receive a claim having priority over any and all expenses of the kind specified in, among other sections of the Bankruptcy Code, Sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 726, and 1114, subject to payment of the Carve Out and subject to the super-priority administrative claims of the DIP Lender under the DIP Term Facility, any super-priority claims of the DIP Revolving Facility, and existing claims of the Pre-Petition Lenders and Revolving Lender on their respective pre-petition collateral; and (b) shall have valid, binding, enforceable and perfected liens in all DIP Collateral, subject to payment of the Carve Out, the DIP Term Liens, any liens securing the DIP Revolving Facility, and any prepetition liens or Revolving Loan Adequate Protection Liens held by the Revolving Lender in the Revolving Loan Priority Collateral (as such term is defined in the Intercreditor Agreement), in each case equal to the sum of the aggregate


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diminution, if any, subsequent to the Petition Date, in the value of their respective pre-petition collateral (the “SWK Adequate Protection Liens”). As adequate protection and in consideration for the Debtors’ use of the Revolving Lender’s cash collateral (if any), the Revolving Lender (a) shall receive a claim having priority over any and all expenses of the kind specified in, among other sections of the Bankruptcy Code, Sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 726, and 1114, subject to payment of the Carve Out and subject to the super-priority administrative claims of the DIP Lender under the DIP Term Facility, the super-priority claims afforded under the DIP Revolving Facility, and existing claims of the Pre-Petition Lenders and Revolving Lender on their respective pre-petition collateral; and (b) shall have valid, binding, enforceable and perfected liens in all DIP Collateral, subject to payment of the Carve Out, the DIP Term Liens, the liens securing the DIP Revolving Facility, and any prepetition liens or SWK Adequate Protection Liens held by the Pre-Petition Lenders in the Term Loan Priority Collateral (as such term is defined in the Intercreditor Agreement), in each case equal to the sum of the aggregate diminution, if any, subsequent to the Petition Date, in the value of their respective pre-petition collateral (the “Revolving Loan Adequate Protection Liens”, and collectively with the SWK Adequate Protection Liens, the “Adequate Protection Liens”). The Adequate Protection Liens shall not encumber Avoidance Actions, but, subject to entry of the Final Order, shall encumber Avoidance Proceeds.

Agent Fees and Expenses: The Debtors shall promptly pay or reimburse SWK when invoiced for all reasonable costs and expenses of counsel (including, without limitation, local counsel) and financial advisors for SWK relating to the DIP Facility and the administration and interpretation of, and the enforcement of remedies under, the DIP Term Facility, regardless of whether such amounts were incurred prior to or after the Petition Date, and including all due-diligence, including but not limited to environmental due-diligence, duplication or printing costs, consultation, travel, and attendance at court hearings, regardless of whether the DIP Term Facility is consummated. SWK shall have the right to charge the DIP Term Facility for any such fees and costs. Failure to pay such fees and expenses within ten days of delivery of the applicable invoice shall be an Event of Default under the DIP Term Facility, provided that SWK shall concurrently provide copies of any invoices to the U.S. Trustee and the Committee (if any) and allow such parties at least ten days to review and object to any fees or expenses requested therein. If any objection is asserted, the Bankruptcy Court shall decide the issue and the Debtors shall not be required to pay any disputed portion of such fees or expenses until the matter is


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resolved.

Conditions Precedent to Initial DIP Term Facility Advance:

The closing of the DIP Term Facility shall be subject to (a) approval of the Interim Budget (as defined below) and Budget by SWK, together with all financial information and projections regarding the Debtors requested by SWK, all in form and substance satisfactory to SWK in its sole discretion, (b) entry of an Interim Order and the Final Order approving the DIP Facility, its superpriority administrative claims and all liens securing the DIP Facility, and containing such other orders and findings as SWK may require, including automatic modification of the automatic stay upon the occurrence of an Event of Default enabling SWK to exercise certain rights and remedies against the DIP Collateral, which Interim Order or Final Order, as applicable, shall not have been modified or amended without approval of SWK, and shall not have been reversed, vacated or stayed pending appeal, in form and substance satisfactory to SWK in its sole discretion, (c) SWK’s approval of all material motions and orders filed in the Chapter 11 Case requiring the expenditure of cash, and (d) continuation of Debtors’ present cash management system.

Additional Conditions to Each Borrowing Under the DIP Term Facility:

The funding of each DIP Term Facility advance shall be subject to the following conditions precedent: (a) There shall exist no Event of Default (or event that would constitute an Event of Default with the giving of notice or lapse of time) under any of the DIP Term Financing Documents, and the representations and warranties therein shall be true and correct in all material respects; (b) There shall have occurred no material adverse change in the Debtors’ operations (financial, environmental, or otherwise), performance, or properties (other than as a result of the commencement of the Chapter 11 Cases), since the date of this DIP Term Sheet, that has or could be expected to have a material adverse effect on the rights and remedies of SWK or on the ability of any Debtor to perform its obligations under the DIP Facility; (c) Compliance with Bankruptcy Rule 4001 and any applicable Local Bankruptcy Rules, the entry of the Interim Order and the Final Order (as applicable), together with any other order requested by SWK authorizing and approving the DIP Term Facility in form, substance and amount and providing for the DIP Collateral, all acceptable to SWK in its sole discretion; (d) Payment of all fees and expenses owing to SWK in connection with the DIP Term Facility; (e) SWK shall be reasonably satisfied that Debtors are continuing to take action and demonstrating progress toward the Milestones; (f) The DIP Term Financing Documents and the Interim and Final Orders shall include such waivers, indemnities, and other provisions as are acceptable to SWK in its sole discretion; and (g) SWK shall be reasonably satisfied that Debtors are continuing to take action and demonstrating progress toward the Milestones.


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Affirmative and Negative Covenants:

The Debtors shall comply with the following affirmative and negative covenants: (a) compliance with Budget covenants consistent with the section titled “Budget and Variances,” (b) the Debtors shall, from and after the Petition Date, satisfy the Milestones; and (c) the Debtors shall, contemporaneously with closing a sale of substantially of all of its assets, remit the net proceeds of such sale to SWK for immediate application to the obligations owed to SWK and the DIP Lender in accordance with the Intercreditor Agreement and waterfall set forth in the Pre-Petition Credit Agreement (as such provision may be modified by agreements between SWK and the DIP Lender), subject to payment of the Carve Out; and (d) no Debtor shall take (or refrain from taking) any action that could reasonably be expected to have a Material Adverse Effect.

Bankruptcy Court Filings: As soon as practicable in advance of filing with the Bankruptcy Court, the Debtors shall furnish to SWK (i) the motion seeking approval of and proposed forms of the Interim Order and the Final Order, which motion shall be in form and substance satisfactory to SWK in its sole discretion, (ii) the motions seeking approval of the bidding procedures and the 363 Sale, and the proposed forms of the orders related thereto, which shall be in form and substance satisfactory to SWK, (iii) all other proposed orders and pleadings related to the DIP Term Facility or DIP Revolving Facility, which orders and pleadings shall be in form and substance satisfactory to SWK in its sole discretion, (iv) any plan of reorganization or liquidation, and/or any disclosure statement related to such plan (which plan or disclosure statement shall comply with the requirements set forth herein), which shall be in form and substance satisfactory to SWK in its sole discretion, (v) any motion and proposed form of order seeking to extend or otherwise modify the Debtor’s exclusive periods set forth in section 1121 of the Bankruptcy Code, (vi) any motion seeking approval of any sale of any Debtor’s assets and any proposed form of a related bidding procedures order and sale order (other than those with respect to the bidding procedures and the 363 Sale), and (vii) any motion and proposed form of order filed with the Bankruptcy Court relating to any management equity plan, incentive plan or severance plan, the assumption, rejection, modification or amendment of any material contract (each of which must be in form and substance satisfactory to SWK in its sole discretion).

Sale Process:

The Debtors shall conduct a sale process for the sale of substantially all of the assets of the Debtors in accordance with the Milestones defined below. The management team of the Debtors, together with the Investment Banker, shall oversee the sale process on behalf of


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the Debtors, including all activities of any advisors retained by the Debtors in connection with the sale process. The Debtors and the Investment Banker, and shall exercise their commercially reasonable best efforts to provide SWK with access to all potential bidders and other interested parties and any information provided to the Debtors by such parties. In addition to the reporting required under the Pre-Petition Credit Agreement, the Debtors shall provide or cause to be provided to SWK a written report from the Investment Banker or the management team of the Debtors bi-weekly (or more frequently as reasonably requested by SWK) in form and substance satisfactory to, and addressing such items as are reasonably requested by SWK, including addressing the status of the marketing and sale process of the Debtors. The Debtors shall also cause their management team and the Investment Banker to be made available to provide periodic telephonic updates of such reports to SWK from time to time (but not less than weekly), as reasonably requested by SWK. Milestones. The Debtors shall be required to comply with the sale timetable set forth below(the “Milestones”), provided, however, that the Milestones are subject to acceleration or modification based upon the terms of subsequent offers received for the purchase of substantially all of the Debtors’ assets: (a) On or before one day of the Petition Date, or such later date to which SWK consents in writing in its sole discretion, the Debtors shall file a motion, in form and substance satisfactory to SWK, requesting entry of the Sale Procedure Order (as defined below); (b) on or before the date that is twenty-five (25) days after the Petition Date, or such later date to which SWK consents in writing in its sole discretion, the Bankruptcy Court shall have entered the Sale Procedure Order; (c) on or before the date that is forty-eight (48) days after the Petition Date, or such later date to which SWK consents in writing in its sole discretion, the Debtors shall have held the Auction (as defined below); (d) on or before the date that is fifty (50) days after the Petition Date, or such later date to which SWK consents in writing in its sole discretion, the Bankruptcy Court shall have entered the Sale Order (as defined below) approving the 363 Sale, the results of the Auction, and the winning bid received at the Auction; (e) on or before the date that is sixty (60) days after the Petition Date, provided that the Bankruptcy Court has waived the stay imposed by Bankruptcy Rule 6004(h), or such later date to


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which SWK consents in writing in its sole discretion, the Sale shall be closed, with the proceeds of the Sale paid directly to SWK as set forth herein. Notwithstanding anything to the contrary herein, the Bankruptcy Court may set dates with respect to the Milestones beyond the outer dates specified above to accommodate its own schedule and to the extent the Bankruptcy Court makes such an extension, the Milestones hereunder shall be automatically extended by the same period as the Bankruptcy Court’s extension. SWK shall have the right to “credit bid” any secured obligations owed to it in any sale of any Debtor’s assets.

Remedies: Following the Termination Date and provided that the Bankruptcy Court does not enter any order to the contrary within five Business Days’ following the Debtors’ receipt of a Default Notice as defined below, SWK shall have customary remedies, including, without limitation, the right to realize on all DIP Collateral, the right to exercise any remedy available under applicable law, without the necessity of obtaining any further relief or order from the Bankruptcy Court. Consistent with the foregoing sentence, section 362 relief from the stay in favor of SWK shall be embodied in any order approving the DIP Facility and the use of cash collateral.

Events of Default: Defaults and Events of Default shall mean the occurrence of any of the following: • James Fleet, or another Chief Restructuring Officer

acceptable to SWK in its sole discretion, shall cease to be engaged by the Debtors.


• Filing or support of a proposed plan of reorganization by any Debtor that does not provide for the indefeasible payment in full and in cash of Debtors’ obligations outstanding under the DIP Facility, unless otherwise agreed in writing by SWK in its sole discretion.

• Entry of an order confirming (or the filing of any motion or pleading requesting confirmation of) a plan of reorganization that does not require the indefeasible repayment in full, in cash of the DIP Facility as of the effective date of the plan, unless otherwise agreed in writing by SWK in its sole discretion.

• Appointment of a trustee under Section 1104 of the Bankruptcy Code without the express written consent of SWK, or the filing of any motion or other pleading


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requesting such relief which the Debtors fail to timely oppose.

• Appointment of an examiner with enlarged powers (powers beyond those set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code without the prior written consent of SWK, or the filing of a motion or other pleading requesting such relief which the Debtors fail to timely oppose.

• Entry of an order by the Bankruptcy Court amending, supplementing, staying, vacating or otherwise modifying the DIP Facility, the Interim Order or Final Order approving the DIP Facility, without the prior written consent of SWK or the filing of a motion or other pleading requesting such relief which the Debtors fail to timely oppose.

• Any attempt by any Debtor to obtain, or if any other party in interest obtains, an order of the Bankruptcy Court or other judgment, and the effect of such order or judgment is to, invalidate, reduce or otherwise impair SWK’s claims, or to subject any of SWK’s collateral to a surcharge pursuant to Section 506(c) of the Bankruptcy Code.



• Entry of an order granting liens or claims that are senior or pari passu to the liens granted in favor of SWK and/or the DIP Lender under the DIP Term Financing Documents.

• Any party in interest (including the Debtor) shall assert that any of the DIP Term Liens are invalid, or any DIP Term Liens granted to the DIP Agent or DIP Lender shall be determined to be invalid.

• Any payment on, or application for authority to pay any pre-petition claim owing to terminated employees or lease rejection damages without prior written consent of SWK or as otherwise set forth in the Budget.

• If at any time, the Investment Banker ceases to be engaged by the Debtors, ceases to be involved in the sales process, or the sales process is halted without SWK’s consent.


• Failure to make all payments under the DIP Facility when


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due.

• Failure to pay any post-petition material indebtedness.

• Breach of any covenant set forth in any DIP Term Financing Document.

• Breach of any covenant set forth in the DIP Revolving Facility.

• Any material representation or warranty by any Debtor is incorrect or misleading in any material respect when made.

• Exclusivity shall have been terminated or any Debtor shall have agreed to any such termination.

• After entry thereof, either of the Sale Procedure Order or the Sale Order shall cease to be in full force and effect, shall have been reversed, stayed, vacated or subject to stay pending appeal or shall have been modified or amended without the prior written consent of SWK.


• Any Debtor shall take (or support any other Person in taking) any action in order to restrict or prohibit SWK or any DIP Lender from submitting a “credit bid” for any assets of any Debtor.

• Any Challenge Action (as such term is defined in the interim or final order approving the DIP Facility) is commenced against the Pre-Petition Agent, any Pre-Petition Lender, or the Revolving Lender.

• The commencement of an action or filing of a motion challenging the rights and remedies of SWK or the DIP Lender under the DIP Term Financing Documents or that is otherwise inconsistent with the DIP Term Financing Documents.


Indemnification: The Debtors shall indemnify and hold SWK, the DIP Lender, and their officers, directors, employees and agents (including all of their professionals) (each an “Indemnified Party”) harmless from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, all fees and disbursements of attorneys and other professionals) to which any Indemnified Party may become liable or which may be incurred by or asserted against any Indemnified Party, in each case in


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connection with or arising out of or by reason of any investigation, litigation or proceeding arising out of or relating to or in connection with the DIP Facility, the DIP Term Financing Documents, any obligation, or any act, event or transaction related or attendant thereto or any use or intended use of the proceeds of the DIP Facility, except to the extent the same is found in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s fraud, gross negligence or willful misconduct. The indemnification terms and conditions of the Pre-Petition Credit Agreement are hereby incorporated in this DIP Term Sheet.



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Other Definitions: “363 Asset Purchase Agreement” means a Third-Party Asset Purchase Agreement satisfactory to SWK, in its sole discretion. “363 Sale” means the sale of all or substantially all of the assets of the Debtor under Section 363 of the Bankruptcy Code. “Approved Budget Variance Report” means a current report that: (i) details the actual amount of cash receipts and disbursements for the prior week for each line item included in the Budget (on a weekly and cumulative basis), (ii) compares such actual cash receipts and disbursements (on a line item by line item basis) with the weekly and cumulative budgeted amounts for each such line item set forth in the Budget for such period, and (iii) provides an explanation for all variances between budgeted and actual amounts. Each Approved Budget Variance Report will be certified as true and correct by the Debtors’ chief financial officer or chief executive officer. “Auction” means an auction held in connection with the 363 Sale and in accordance with the provisions set forth in the Sale Procedure Order. “Avoidance Actions” means any causes of action that could be brought under §§ 544-548 of the Bankruptcy Code or any applicable state fraudulent-transfer statute or similar statute. “Avoidance Proceeds” means the proceeds received from, or property recovered in respect of, Avoidance Actions. “Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et seq.), as amended. “Bankruptcy Court” means the United States Bankruptcy Court for the District of New York presiding over the Chapter 11 Cases. “Budget” means the budget of Debtor relative to the operations of the Debtors in the Chapter 11 Cases for any fiscal period, as delivered to SWK in form and substance satisfactory to SWK. A Budget for the first 8 weeks of the Chapter 11 Case (the “Interim Budget”) must be approved by SWK and must be attached to the Interim Order. A Budget covering the period from the date of entry of the Final Order through the Maturity Date must be delivered by the Debtor to SWK (and approved by SWK in its sole discretion) at least two Business Days before any hearing related to final approval of the DIP Facility and must be attached to the Final Order. “Carve Out” means: (a) unpaid, postpetition fees and expenses of the Clerk of


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the Court and the U.S. Trustee pursuant to 28 U.S.C. § 1930(a) (collectively, the “Statutory Fees”); (b) the unpaid postpetition fees and expenses of the professionals retained by the Debtor and by the Committee (if any), whose retentions are approved pursuant to final orders of the Court under sections 327, 328, 363 or 1103(a) of the Bankruptcy Code (the “Chapter 11 Professionals”), but only to the extent that such fees and expenses are (i) incurred prior to a Termination Event, (ii) within the amounts set forth in the Budget approved by SWK, provided, however, that any amount of fees paid from a retainer held by a professional shall be in addition to, and shall not count against, the amounts in the Budget for purposes of the “Carve-Out”, and (iii) subsequently allowed by the Bankruptcy Court under sections 330, 331, or 363 of the Bankruptcy Code; and (c) postpetition fees and expenses of the Chapter 11 Professionals incurred after the occurrence of a Termination Event in an aggregate amount not to exceed (x) for Chapter 11 Professionals retained by the Debtors, $75,000 or (y) for Chapter 11 Professionals retained by the Committee $25,000, to the extent such fees and expenses are (i) subsequently allowed by the Bankruptcy Court under sections 330, 331, or 363 of the Bankruptcy Code, and (ii) not otherwise paid from any retainers or any other professional expense escrow account established by the Debtor. Provided, however, that (a) the Carve Out shall only be available to pay fees and expenses set forth herein to the extent that unencumbered funds are not otherwise available; and (b) in no event shall the Carve-Out for each Chapter 11 Professional exceed the amounts for postpetition fees set forth for such professional in the Budget as of the applicable date of determination. The Carve Out shall not include payment for any fees and expenses, if any, of the Chapter 11 Professionals incurred directly or indirectly, in respect of, arising from or relating to: (i) the initiation, joinder, support, or prosecution of any action contesting the indebtedness owed to SWK, the DIP Lender, the Revolving Lender, the Pre-Petition Agent, or the Pre-Petition Lenders, or the validity of any liens granted to SWK, the DIP Lender, the Revolving Lender, the Pre-Petition Agent, or the Pre-Petition Lenders; (ii) preventing, hindering or otherwise delaying (or supporting any other person or entity in preventing, hindering or otherwise delaying), whether directly or indirectly, the exercise by SWK, the DIP Revolving Facility agent, the Revolving Lender, the


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Pre-Petition Lender, or the the Pre-Petition Agent of any of its rights and remedies under the Interim Order, Final Order, or documents comprising the DIP Facility, DIP Term Financing Documents, Revolving Loan Documents, Pre-Petition Credit Agreements, or other Pre-Petition Loan Documents; (iii) the commencement, support, or prosecution of any action or proceeding (or support of any other person or eneity in commencing or prosecuting) of any claims, causes of action or defenses against SWK, the DIP Lender, the DIP Revolving Facility Agent, the Revolving Lender, the Pre-Petition Agent, the Pre-Petition Lenders or any of their respective officers, directors, employees, agents, attorneys, affiliates, successors or assigns, including, without limitation, any attempt to recover or avoid any claim or interest from SWK, the DIP Lender, the DIP Revolving Facility agent, the Revolving Lender, the Pre-Petition Agent, or the Pre-Petition Lender; (iv) any request to borrow money other than pursuant to the terms of the Interim Order, the Final Order, the DIP Revolving Facility documents, or the DIP Term Financing Documents; (v) with respect to any Debtor, any of the Debtors’ Chapter 11 Professionals, or any of their successors or assigns (including, without limitation, any trustee, responsible officer, examiner, estate administrator or representative or similar person appointed in a case for the Debtor under any chapter of the Bankruptcy Code) performing or commencing any investigation or litigation (whether threatened or pending) by the Debtor with respect to any matter released or to be released, waived, or to be waived, or specified as not subject to challenge by the Debtor pursuant to the Interim Order or Final Order; or (vi) for any other purpose for which proceeds of the DIP Facility may not be used pursuant to this DIP Term Sheet. “Chapter 11 Cases” means the voluntary Chapter 11 cases commenced by the Debtors to be commenced in the Bankruptcy Court. “Committee” means any statutory committee appointed in the Chapter 11 Case. “Final Order” means a final, non-appealable order of the Bankruptcy Court, that, without limitation, approves the DIP Facility and grants the liens and security interests contained therein, on terms satisfactory to SWK in its sole discretion. “Intercreditor Agreement” means that certain Amended and Restated Intercreditor Agreement, by and between SWK and the Revolving Later, dated on or about May 11, 2017.


20 #59474357_v8

“Interim Order” means an interim order of the Bankruptcy Court authorizing Debtors, among other things, to obtain interim financing and incur post-petition indebtedness on terms satisfactory to SWK in its sole discretion. “Investment Banker” means Raymond James. “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties, liabilities (actual or contingent) or condition (financial or otherwise) of any Debtor; (b) a material impairment of the rights and remedies of any of the DIP Agent, DIP Lender, Pre-Petition Agent, or Pre-Petition Lenders under any of the DIP Term Financing Documents, Pre-Petition Credit Agreement, or other Pre-Petition Loan Documents, (c) a material impairment of any Debtor to perform any of its obligations under the DIP Term Financing Documents, Pre-Petition Credit Agreement, or other Pre-Petition Loan Documents, or (d) a material adverse effect upon the legality, validity, binding effect, or enforceability against any Debtor of any of the DIP Term Financing Documents, Pre-Petition Credit Agreements, or other Pre-Petition Loan Documents. “Maturity Date” means the date that is sixty (60) days after the Petition Date, or such later date to which SWK consents in writing. “Petition Date” means the date on which the Chapter 11 Case for such Debtor was filed with the Bankruptcy Court. “Pre-Petition Loan Documents” means the Loan Documents (as such term is defined in the Pre-Petition Credit Agreement). “Revolving DIP Loan Documents” means collective agreement(s) between the Debtors and Revolving Lender regarding the provision of the DIP Revolving Facility. “Revolving Lender” means SCM Specialty Finance Opportunities Fund, L.P.. “Revolving Loan Agreement” has the meaning ascribed to it in the Intercreditor Agreement. “Revolving Loan Documents” has the meaning ascribed to it in the Intercreditor Agreement. “Sale” means a sale of all or substantially all of the Debtors’ assets. “Sale Order” means the order entered by the Bankruptcy Court


21 #59474357_v8

in form and substance satisfactory to SWK (in its sole discretion) that, among other things, approves the 363 Sale, the results of the Auction (if applicable) and the Winning Bidder’s bid. “Sale Procedure Order” means an order in form and substance satisfactory to SWK approving (a) the bidding procedures to be applicable to the 363 Sale and (b) subject to higher and better bid, the 363 Asset Purchase Agreement. “Third-Party Asset Purchase Agreement” means an asset purchase agreement by and among the Debtors and a third party purchaser that provides for the purchase and sale of substantially all of the assets of the Debtors, which third party purchaser and asset purchase agreement are satisfactory to SWK in its sole discretion. “Winning Bidder” means the bidder that (a) agrees (at the Auction if applicable) to purchase all or substantially all of the assets of the Debtors pursuant to a Third-Party Asset Purchase Agreement, and (b) is acceptable to SWK.


22 #59474357_v8

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first set forth above.

BORROWERS: HOOPER HOLMES, INC., a New York corporation By: Name: Title: PROVANT HEALTH SOLUTIONS, LLC, a Rhode Island limited liability company By: Name: Title: HOOPER WELLNESS, LLC, a Kansas limited liability company By: Name: Title: ACCOUNTABLE HEALTH SOLUTIONS, LLC, a Kansas limited liability company By: Name: Title: HOOPER INFORMATION SERVICES, INC., a New Jersey corporation By: Name: Title:


23 #59474357_v8

HOOPER DISTRIBUTION SERVICES, LLC, a New Jersey limited liability company By: Hooper Holmes, Inc., its Manager By: _________________________________ Name: Title: HOOPER KIT SERVICES, LLC, a Kansas limited liability company By: Hooper Holmes, Inc., its sole Member By: _______________________________ Name: Title:


24 #59474357_v8

AGENT: SWK FUNDING LLC By: /s/ Winston Black Name: Winston Black Title: Chief Executive Officer

LENDER: SWK FUNDING LLC By: /s/ Winston Black Name: Winston Black Title: Chief Executive Officer


4847-3410-3664.6

Richard J. Bernard FOLEY & LARDNER LLP 90 Park Avenue New York, New York 10016-1314 Telephone: (212) 682-7474 Facsimile: (212) 687-2329

- and -

John P. Melko (pro hac vice pending) FOLEY & LARDNER LLP 1000 Louisiana Street, Suite 2000 Houston, TX 77002-2099 Telephone: (713) 276-5500 Facsimile: (713) 276-5555

Proposed Counsel for the Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------------------------------x In re:

HOOPER HOLMES, INC., et al.,

Debtors.1

::::::

Chapter 11

Case No. 18-23302 (RDD)

(Joint Administration Requested)

-----------------------------------------------------------------x

DEBTORS’ MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS (I) AUTHORIZING THE DEBTORS TO OBTAIN POST-

PETITION FINANCING, GRANTING SENIOR POSTPETITION SECURITY INTERESTS AND ACCORDING SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS PURSUANT TO SECTIONS 364(C) AND 364(D) OF THE BANKRUPTCY

CODE; (II) AUTHORIZING THE USE OF CASH COLLATERAL; (III) GRANTING ADEQUATE PROTECTION; (IV) MODIFYING

THE AUTOMATIC STAY; AND (V) GRANTING RELATED RELIEF

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are as follows: Hooper Holmes, Inc. (9359); Hooper Distribution Services, LLC (6838); Hooper Wellness, LLC (6005); Accountable Health Solutions, LLC (9625); Hooper Information Services, Inc. (4927); Hooper Kit Services, LLC (8378); and Provant Health Solutions, LLC (8511). The location of the Debtors’ corporate headquarters is 560 N. Rogers Road, Olathe, KS 66286.

18-23302-rdd Doc 5 Filed 08/27/18 Entered 08/27/18 17:57:01 Main Document Pg 1 of 42

2

By this Motion,2 the above-captioned debtors and debtors in possession (collectively, the

“Debtors” or “Provant”) request entry of an interim order, substantially in the form attached

hereto as Exhibit A (the “Interim Order”), and a final order (the “Final Order,”3 and together

with the Interim Order, collectively, the “DIP Orders”): (I) authorizing the Debtors to (a) to incur

the DIP Financing, including with respect to an interim borrowing of $2.6 million,4 (b) granting

senior postpetition security interests and superpriority administrative expense status, and (c) use

the Cash Collateral; (II) granting adequate protection as provided herein; (III) modifying the

automatic stay; and (IV) scheduling a hearing to consider the relief requested herein on a final

basis (the “Final Hearing”).

In support of this Motion, the Debtors submit the Declaration of James E. Fleet in

Support of Chapter 11 Petitions and First Day Motions, filed contemporaneously herewith

(the “First Day Declaration”).5

Jurisdiction

1. The United States Bankruptcy Court for the Southern District of New York (the

“Court”) has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the

Amended Standing Order of Reference from the United States District Court for the Southern

District of New York, dated December 1, 2016. The Debtors confirm their consent, pursuant to

rule 7008 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), to the entry

of a final order by the Court in connection with this motion to the extent that it is later

2 Capitalized terms used in this Motion and not defined herein shall have the meanings set forth in the DIP Documents (as defined herein) or the First Day Declaration, as applicable. 3 The Debtors will file the form of Final Order prior to the Final Hearing (as defined herein). 4 The Debtors intend to borrow approximately (a) $1.15 million from the DIP Term Facility (as defined herein) and (b) net amounts of $1.4 million from the DIP Revolving Facility (as defined herein). As the DIP Revolving Facility is a revolving line of credit, the Debtors expect that they will borrow approximately $2.8 million in gross amounts from the DIP Revolving Lender. 5 A budget presenting the Debtors’ projected receipts and disbursements is additionally attached hereto as Exhibit 1 to the Interim Order.


3

determined that the Court, absent consent of the parties, cannot enter final orders or judgments in

connection herewith consistent with Article III of the United States Constitution.

2. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

3. The statutory bases for the relief requested herein are sections 105(a), 361, 362,

363(b), 363(c), 363(e), 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1), 364(e), and 507(b) of title 11

of the United States Code (the “Bankruptcy Code”), Rules 2002, 4001, 6003, 6004, and 9014 of

the Bankruptcy Rules, and rule 4001-2 of the Local Bankruptcy Rules for the Southern District

of New York (the “LBRs”).

Preliminary Statement

4. The Debtors’ ability to obtain access to liquidity is critical to funded their

operations and these chapter 11 cases. The Debtors, with the assistance of Raymond James,

completed a thorough marketing process to solicit proposals for debtor-in-possession financing

from their Prepetition Secured Lenders and twelve additional parties, including five commercial

banks and seven alternative lenders. Nine lenders declined to submit a term sheet before

executed a non-disclosure agreement (“NDA”), citing an expected priming fight as one of the

main reasons for not participating. Three parties executed NDAs and reviewed the materials, but

did not submit term sheets.

5. This process was ultimately successful, culminating in a $12 million DIP

Revolving Facility provided by the prepetition Revolving Lender Party and a $1.6 million DIP

Term Facility provided by SWK, the prepetition term credit facility lender. The DIP Facilities

will provide sufficient liquidity to fund these chapter 11 cases and the Debtors’ general corporate

operations, finance operational restructuring and cost-savings initiatives, and, importantly, make

payments to the Debtors’ vendors and other participants in the Debtors’ supply chain.


4

Ultimately, the DIP Facilities will give the Debtors the funds necessary to maintain enterprise

value while it consummates a value-maximizing transaction. The Debtors firmly believes that

approval of the DIP Facilities will maximize value for their stakeholders and is a sound exercise

of the Debtors’ sound business judgment. Accordingly, the Debtors respectfully requests that the

Bankruptcy Court grant the requested relief.

Relief Requested

6. By this Motion, the Debtors respectfully request that the Court grant the following

relief as provided in the DIP Orders:6

a. Authorization pursuant to sections 363, 364(c), and 364(d) of the Bankruptcy Code for the Debtors to obtain postpetition financing (the “DIP Financing”) in the form of:

i. the senior, secured, priming, and superpriority revolving credit facility, a copy of which is attached to the Interim Order as Exhibit 2 (as amended, supplemented or otherwise modified from time to time in accordance with the terms and conditions set forth herein, the “DIP Revolving Credit Agreement”), by and among the Debtors and CNH Finance Fund I, L.P. (“CNH”), as the lender party thereto (the “DIP Revolving Lender”), and the other Loan Documents (as defined in the Revolving DIP Agreement, the “DIP Revolving Financing Documents”), in a maximum aggregate principal amount of $12 million (the “DIP Revolving Facility”); and

ii. the senior, secured, priming, and superpriority term loan facility as set forth in that certain DIP Term Sheet in accordance with the terms and conditions of the existing Amended and Restated Credit Agreement by and among the SWK Funding LLC (“SWK,” and together with CNH, the “Prepetition Secured Lenders”) and Debtors, dated as of May 11, 2017, a copy of which is attached to the Interim Order as Exhibit 3 (as amended, supplemented or otherwise modified from time to time, the “DIP Term Loan Agreement”, and together with Revolving DIP Agreement, the

6 This summary is qualified in its entirety by reference to the applicable provisions of the DIP Documents or the DIP Orders. To the extent there exists any inconsistency between this concise statement and the provisions of the DIP Documents or the DIP Orders, the provisions of the DIP Documents or the DIP Orders, as applicable, shall control.


5

“DIP Loan Agreements”), by and among the Borrower, SWK, as agent (in such capacities, the “DIP Term Agent”), and the lender parties thereto (the “DIP Term Lenders,” and together with the DIP Term Agent, the “DIP Term Parties,” and together with the DIP Revolving Lender, the “DIP Lender Parties”) and all other agreements, documents and instruments executed and delivered, to or in favor of the DIP Term Agent and DIP Term Lenders in connection therewith (the “DIP Term Financing Documents,” and together with the DIP Revolving Financing Documents, the “DIP Financing Documents”), in a maximum principal amount of $1.6 million (the “DIP Term Facility”, together with the DIP Revolving Facility, the “DIP Facilities”).

b. authorization for the Debtors to execute, deliver and enter into the DIPLoan Agreements, and the other DIP Financing Documents and to performall of their respective obligations thereunder and such other and furtheracts as may be required in connection with the DIP Financing Documents,including, without limitation, authorization to pay all amounts, obligationsand liabilities owing or payable to the DIP Lender Parties under the DIPFacilities pursuant to the respective DIP Financing Documents;

c. authorization for the Debtors to grant superpriority administrative claimstatus, pursuant to sections 364(c)(1) and 507(b) of the Bankruptcy Code,to the DIP Lender Parties in respect of all DIP Obligations (as defined inthe Interim Order), subject to the Carve Out;

d. authorization for the Debtors to grant senior, secured, and priming liensupon the DIP Collateral (as defined in the Interim Order), subject to theCarve Out;

e. authorization for the Debtors’ use of cash collateral whenever or whereveracquired, and the proceeds of all collateral pledged to the PrepetitionSecured Parties,7 as contemplated by section 363 of the Bankruptcy Code;

f. authorization for the Debtors to grant adequate protection to thePrepetition Secured Parties;

g. modification of the automatic stay and waiving the fourteen (14) day stayprovisions of Bankruptcy Rules 4001(a)(3) and 6004(h); and

h. the setting of a final hearing on the Motion (the “Final Hearing”) toconsider entry of the Final Order granting the relief requested in theMotion on a final basis, as set forth in the Motion and the DIP LoanAgreements filed with the Court; and

7 “Prepetition Secured Parties” refers to CNH and SWK.


6

i. related relief.

Concise Statement Pursuant to Local Bankruptcy Rule 4001-28

7. Pursuant to Bankruptcy Rules 4001(b), (c) and (d), and LBR 4001-2, the

following chart is a concise statement and summary of the proposed material terms of the DIP

Revolving Facility:9

Bankruptcy Code/Local Rule Summary of Material Terms

Borrower Bankruptcy Rule 4001(c)(1)(B) LBR 4001-2(a)(14)

All Debtors, with each jointly and severally liable to pay the commitment under the DIP Revolving Facility.

DIP Revolving Credit Agreement, pg. 1, Borrowers

DIP Financing Lenders Bankruptcy Rule 4001(c)(1)(B)

CNH Finance Fund I, L.P. or an affiliate of CNH Finance Fund I, L.P.

DIP Revolving Credit Agreement, pg. 1, Lender

Interim Order, Introduction

Reporting Information Bankruptcy Rule 4001(c)(l)(B) LBR 4001- 2(a)(2)

The DIP Facilities include standard and customary conditions that require the Debtors to provide periodic reports to the DIP Lender Parties and their respective professionals regarding the Budget, variances thereto, the statute of these chapter 11 cases and the sales process, and certain other matters.

Interim Order, ¶ 21

Entities with Interests in Cash Collateral Bankruptcy Rule 4001(b)(l)(B)(i)

Prepetition Secured Parties


Term Bankruptcy Rule 4001(b)(l)(B)(iii), 4001(c)(1)(B) LBR 4001- 2(a)(10)

The earliest to occur of (a) the Maturity Date; (b) twenty-five (25) days after the Petition Date if the Final Order has not been entered; (c) acceleration of the obligations under the DIP Term Facility or DIP Revolving Facility due to an Event of Default; (d) the effective date of a confirmed plan of reorganization or liquidation that provides for indefeasible payment in full, in cash of all obligations owing under the DIP Facility or is otherwise acceptable to CNH in its sole discretion; (e) the date which is the closing date of any sale of all or substantially all of the Debtors’ assets; (f) the entry of an order by the Bankruptcy Court (i) granting relief from the automatic stay permitting foreclosure of any assets of any Debtor with a value in excess of $100,000 in the aggregate, (ii) granting any motion by CNH or the DIP Term Lender to terminate the use of cash collateral or lift the stay or otherwise

8 The summaries contained in this Motion are qualified in their entirety by the provisions of the documents referenced, including the DIP Loan Agreements and the Interim Order. To the extent anything in this Motion is inconsistent with such documents, the terms of the applicable documents shall control. Capitalized terms used in this summary chart but not otherwise defined have the meanings ascribed to them in the DIP Financing Documents or the Interim Order, as applicable. 9 This statement is qualified in its entirety by reference to the applicable provisions of the DIP Documents. To theextent there exists any inconsistency between this concise statement and the provisions of the DIP Documents or the DIP Orders, the provisions of the DIP Documents or the DIP Orders, as applicable, shall control.


7


exercise remedies against any cash collateral, (iii) appointing a trustee or an examiner with special powers, or (iv) dismissing or converting any of the Chapter 11 Cases; (g) the filing or support by any Debtor of a plan of reorganization that (i) does not provide for indefeasible payment in full, in cash of all obligations owing under the DIP Facility and (ii) is not otherwise acceptable to CNH in its sole discretion; (h) entry of a Bankruptcy Court order granting liens or claims that are senior or pari passu to the liens securing the DIP Facility, and (i) the date of termination or acceleration of the DIP Term Facility. The date on which the earliest of clauses (a) through (i) above occurs and CNH provides notice thereof to the Debtors being referred to hereinafter as the “Termination Date.”

DIP Revolving Credit Agreement, pg. 2-3, Termination Date

Adequate Protection Bankruptcy Rules 4001(b)(l)(B)(iv), 4001(c)(1)(B)(ii) LBR 4001-2(a)(4)

Adequate Protection. The adequate protection package includes:

• The adequate protection lien, including a first priority lien and security interest ; replacement liens in all DIP Collateral;

• A superpriority administrative expense claim pursuant to section 507(b) of the Bankruptcy Code;

• Payments of interest on the prepetition Revolving Loan Debt at the non-default rate under the Revolving Loan Documents on a current basis;

• Maintenance of the Debtors’ prepetition cash management system for the purposes of compliance with Section 2.5 of the Revolving Credit Facility (as defined herein);

• payments or reimbursement in cash for any and all fees, costs, expenses, and charges (including the reasonable fees, costs, and expenses of counsel and financial advisors for the Revolving Loan Lender) to the extent, and at the times, payable under the Revolving Loan Documents, including any unpaid fees, costs, and expenses accrued prior to the Petition Date, whether or not budgeted in the approved budget, and without further notice (with respect to postpetition professional fees, costs, and expenses), motion, or application to, order of, or hearing before, the bankruptcy court before which the cases are pending.

DIP Revolving Credit Agreement, pg. 4-5, Collateral, Priority and Security


Waiver/Modification of the Automatic Stay Bankruptcy Rule 4001(c)(1)(B)(iv)

The DIP Facilities provide that automatic stay provisions of section 362 are hereby modified to permit (a) the Debtors, the DIP Revolving Secured Parties, and the DIP Term Secured Parties to implement and perform the DIP Term Facility, DIP Term Financing Documents, DIP Revolving Facility, and the DIP Revolving Financing Documents, including without limitation the provisions thereof with respect to the collection of proceeds, and (b) the creation and perfection of all Liens granted or permitted by this Order.

The DIP Facilities provide that upon the occurrence of an Event of Default and certain other events, and after five (5) business days from the date of the Default Notice, the DIP Lender Parties may proceed against and realize upon the DIP Collateral.

Interim Order, ¶ 14, 20

Carve Out Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(5)

The Interim Order provides a “Carve Out” for the following expenses:

• unpaid postpetition fees and expenses of the Clerk of the Court and the U.S. Trustee pursuant to 28 U.S.C. § 1930, plus applicable interest, if any;

• unpaid postpetition fees and expenses of professionals of the Debtors and professionals of a Statutory Committee (if any), which are retained by an order of the Court pursuant to sections 327, 328, 363 or 1103(a) of the Bankruptcy Code (the “Professionals”), but only to the extent such fees and expenses are (i) incurred prior to a Termination Event, (ii) within the amounts set forth in the Budget approved by the DIP Term Agent and DIP Revolving Agent, provided, however, that any amount of fees paid from a retainer held


8


by a professional shall be in addition to, and shall not count against, the amounts in the Budget for purposes of the “Carve-Out”, and (iii) subsequently allowed by the Bankruptcy Court under sections 330, 331, or 363 of the Bankruptcy Code; and

• postpetition fees and expenses of the Professionals incurred after a Termination Event inan aggregate amount not to exceed $100,000, allocated (i) $75,000 to the Debtors’ Professionals and (ii) $25,000 to the any Statutory Committees’ Professionals, to the extent such fees and expenses are (i) subsequently allowed by the Bankruptcy Court under sections 330, 331, or 363 of the Bankruptcy Code, and (ii) not otherwise paid or payable from retainers (or other immediately available funds) or any professional expense escrow account established by the Debtors; and

• A “Transaction Fee” as defined and payable pursuant to the terms of the engagementagreement between the Debtors and Raymond James, and as authorized by the Court’s order approving the engagement and retention of Raymond James, as investment bankers to the Debtors.

provided, however, that (a) the Carve-Out shall only be available to pay fees and expenses set forth herein to the extent that unencumbered funds are not otherwise available; and (b) in no event shall the Carve-Out funds to be used to pay fee amounts for any Professional that exceed the amounts for postpetition fees for such Professional set forth in the Budget for such Professional as of the applicable date of determination.

The Carve Out shall not include any fees and expenses arising from or related to:

• the initiation, joinder, support, or prosecution of any action contesting the indebtednessowed to CNH as the Revolving Loan Lender or as the DIP Lender, or the validity of anyliens granted to CNH, as the Revolving Loan Lender or as the DIP Lender;

• preventing, hindering or otherwise delaying (or supporting any other person or entity inpreventing, hindering or otherwise delaying), whether directly or indirectly, the exerciseby CNH as the Revolving Loan Lender or as the DIP Lender of any of its rights andremedies under the Interim Order, Final Order, the Revolving Loan Documents ordocuments comprising the DIP Facility;

• the commencement, support, or prosecution of any action or proceeding of any claims,causes of action or defenses against CNH, as the Revolving Loan Lender or the DIPLender, the Term Loan Lenders or the DIP Term Lender or any of their respectiveofficers, directors, employees, agents, attorneys, affiliates, successors or assigns,including, without limitation, any attempt to recover or avoid any claim or interest fromCNH, the DIP Lender, the Term Loan Lenders or the DIP Term Lender;

• any request to borrow money other than pursuant to the terms of the Interim Order, theFinal Order, or the DIP Facility;

• with respect to any Debtor, any of the Debtors’ Chapter 11 Professionals, or any of theirsuccessors or assigns (including, without limitation, any trustee, responsible officer,examiner, estate administrator or representative or similar person appointed in a case forthe Debtor under any chapter of the Bankruptcy Code) performing or commencing anyinvestigation or litigation (whether threatened or pending) by the Debtor with respect toany matter released or to be released, waived, or to be waived, or specified as not subjectto challenge by the Debtor pursuant to the Interim Order or Final Order; or

• for any other purpose for which proceeds of the DIP Facility may not be used pursuant tothe DIP Revolving Credit Agreement

DIP Revolving Credit Agreement, pg. 15-16, Other Definitions


506(c) Waiver Bankruptcy Rule 4001(c)(l)(B)(x)

Subject to the entry of the Final Order:

• the Debtors irrevocably waive all claims and rights, if any, that the Debtors or theirestates might otherwise assert against the Prepetition Collateral or DIP Collateralpursuant to Bankruptcy Code sections 506(c), 105(a) or any other applicable law;


9


• except from and pursuant to the terms of the Carve-Out, no entity in the course of theDebtors’ bankruptcy cases shall be permitted to recover from the DIP Collateral (whetherdirectly or through the grant of derivative or equitable standing in the name of anyDebtor or any Debtor’s estate) any cost or expense of preservation or disposition of thePrepetition Collateral or DIP Collateral, including, without limitation, expenses andcharges as provided in Bankruptcy Code sections 506(c), 105(a), or any other applicablelaw

Interim Order, ¶ 17.A, B

Section 552(b) Bankruptcy Rule 4001(c)(l)(B)

Subject to entry of the Final Order:

The DIP Term Secured Parties, DIP Revolving Secured Parties, Prepetition Term Secured Parties, and Prepetition Revolving Secured Party shall not be subject to the “equities of the case” exception of Bankruptcy Code section 552(b), or to the equitable doctrines of “marshaling” or any similar claim or doctrine, with respect to any DIP Collateral or Prepetition Collateral.

Interim Order, ¶ 17.D.

Commitment Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(1)

Commitment of up to $12,000,000, inclusive of any obligations outstanding under the prepetition Revolving Loan Documents, which shall be paid, “rolled up” and deemed secured postpetition obligations under the DIP Revolving Facility.

Borrowings under the Facility shall be subject to terms and restrictions as set forth in the Revolving Loan Documents, including with respect to Eligible Receivables.

DIP Revolving Credit Agreement, pg. 2, Facility Amount; pg. 7, Availability Formula

Interest Rates Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(3)

Prime Rate plus 7.5% of outstanding DIP Revolving Obligations (the “Non-Default Interest Rate”). “Prime Rate” means the rate of interest quoted from time to time by Wells Fargo Bank as its prime rate or a comparable reference rate designated by DIP Lender.

Default Interest: Effective immediately upon the occurrence of an Event of Default under the Revolving DIP Loan Documents, unless waived in writing by CNH, interest on the outstanding loans under the DIP Revolving Facility shall accrue at a rate that is 2% per annum in excess of the Non-Default Interest Rate.

DIP Revolving Credit Agreement, pg. 7, Interest Rate

Milestones Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(2)

Sale Process LBR 4001-2(a)(12)

“Milestones” is defined as:

• On the Petition Date or one calendar day thereafter, or such later date to which the DIPTerm Agent and DIP Revolving Agent consent in writing in their sole discretion, theDebtors shall file a motion, in form and substance satisfactory to the DIP Agents,requesting entry of an order approving a sale of substantially all of their assets (the “SaleOrder”) and an order approving procedures for conducting such sale (the “Sale ProcedureOrder”);

• On or before the date that is twenty-five (25) days after the Petition Date, or such laterdate to which the DIP Term Agent and DIP Revolving Agent consent in writing in theirsole discretion, the Court shall have entered the Sale Procedure Order;

• On or before the date that is forty-eight (48) days after the Petition Date, or such laterdate to which the DIP Term Agent and DIP Revolving Agent consent in writing in theirsole discretion, the Debtors have conducted an auction (if more than one bid is received)for the sale of substantially all of their assets;

• On or before the date that is fifty (50) days after the Petition Date, or such later date towhich the DIP Term Agent and DIP Revolving Agent consent in writing in their solediscretion, the Court shall have entered the Sale Order and approved the sale of


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substantially all of the Debtors’ assets to the successful bidder; • On or before the date that is sixty (60) days after the Petition Date, or such later date to

which the DIP Term Agent and DIP Revolving Agent consent in writing in their sole discretion, the Debtors’ sale of substantially all of their assets shall have closed, with the proceeds of such sale being disbursed to the DIP Term Agent and DIP Revolving Agent in accordance with this Order.

DIP Revolving Credit Agreement, pg. 11, Sales Process


Challenge Period Bankruptcy Rule 4001(c)(l)(B) LBR 4001- 2(a)(8)

The Challenge Period is the earlier of (i) sixty (60) calendar days from the Petition Date; or (ii) forty-five (45) days from the date on which a Statutory Committee is formed.


Use of DIP Financing Facility and Cash Collateral Bankruptcy Rule 4001(b)(l)(B)(ii) LBR 4001- 2(a)(2)

Limitation on Use of Proceeds LBR 4001-2(a)(9)

Borrowers shall use the proceeds to provide working capital through a bankruptcy sale process and reorganization proceedings in accordance with the Budget approved in advance by CNH.

No proceeds of the DIP Facilities or Cash Collateral shall be used to:

• permit the Debtors or any other party-in-interest to institute any proceeding to determine (i) the validity, perfection, or priority of any security interests in favor of the Prepetition Revolving Secured Parties, the Prepetition Term Secured Parties, the DIP Revolving Secured Parties, or the DIP Term Secured Parties or (ii) the enforceability of any of the Debtors’ obligations under, or the obligations of any guarantor under, the Prepetition Revolving Loan Documents, Prepetition Term Loan Documents, DIP Revolving Financing Documents, or DIP Term Financing Documents;

• investigate, commence, prosecute or defend (or support any other person or entity in investigating, commencing, prosecuting or defending) any claim, motion, proceeding or cause of action against the Prepetition Revolving Secured Parties, the Prepetition Term Secured Parties, the DIP Revolving Secured Parties, or the DIP Term Secured Parties or any of their agents, attorneys, advisors or representatives, including, without limitation, claims or causes of action relating to lender liability or subordination claims;

• investigate, commence, prosecute, or defend (or support any other person or entity in investigating, commencing, prosecuting, or defending) any claim or proceeding or cause of action to disallow or challenge the obligations of any Debtor or guarantor under the Prepetition Revolving Loan Documents, the Prepetition Term Loan Documents, the DIP Revolving Financing Documents, or the DIP Term Financing Documents; provided, however, that a Statutory Committee (if any) and its professionals shall be allowed to use proceeds of the DIP Revolving Facility, DIP Term Facility, or Cash Collateral in a collective amount not to exceed ten thousand dollars ($25,000) to investigate the validity of the Prepetition Term Liens and Prepetition Revolving Liens (the “Committee Budget”); or

• fund any acquisitions, capital expenditures, capital leases, or similar expenditures other than those specifically set forth in the Budget.

DIP Revolving Credit Agreement, pg. 2, Purpose

Interim Order, ¶ 3


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Stipulations to Prepetition Liens and Claims Bankruptcy Rule 4001(c)(1)(B)(iii) LBR 4001- 2(a)(4)

As of the Petition Date, without prejudice to the rights of third parties or any Statutory Committee, the Debtors admit, represent, and stipulate as to certain stipulations regarding the validity and extent of the DIP Revolving Lender’s claims and liens.

DIP Revolving Credit Agreement, pg. 7, Lien Validation and Perfection

Interim Order, ¶ F, 26.B

Waiver/Modification of Applicability of Nonbankruptcy Law Relating to Perfection or Enforceability of Liens Bankruptcy Rule 4001(c)(1)(B)(vii)

The Debtors and the holders of any DIP Term Lien, DIP Revolving Lien, Term Adequate Protection Lien, or Revolving Adequate Protection Lien, shall not be required to enter into any additional security agreements to create, memorialize, and/or perfect any such Liens, or to file UCC financing statements, mortgages, or other instruments with any other filing authority or take any other action to perfect any such Liens, which shall be and are deemed valid, binding, enforceable and automatically perfected by the docket entry of this Order by the Clerk of the Court. If, however, the holder of any DIP Term Lien, DIP Revolving Lien, Term Adequate Protection Lien, or Revolving Adequate Protection Lien in its sole and absolute discretion shall elect for any reason to enter into, file, record or serve any such financing statements or other documents with respect to any such Lien, then the Debtors shall execute the same upon request and the filing, recording or service thereof (as the case may be) shall be deemed to have been made at the time and on the date of the docket entry of this Order by the Clerk of the Court.


Repayment Features LBR 4001- 2(a)(13)

The Debtors promise and agree, jointly and severally, to pay to the DIP Revolving Lender all DIP Revolving Obligations, together with interest thereon accruing pursuant to the Revolving DIP Loan Documents, in full, in cash, at the times set forth in the Revolving DIP Loan Documents, but no later than the Termination Date.

Payments shall be made of interest-only, monthly in arrears on the outstanding principal balance; principal and all other DIP Revolving Obligations due in full on the Maturity Date.

Mandatory Repayment. Upon an Event of Default, the DIP Lender Parties may demand repayment of DIP Facilities obligations then outstanding.

DIP Revolving Credit Agreement, pg. 3-4, Repayment


Fees Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(3), (16)

The following are the fees associated with the revolving line of credit.

• Facility Fee: Borrowers shall be obligated to pay DIP Lender a “Facility Fee” in anamount equal to one percent (1%) of the Facility Amount payable from the proceeds atclosing.

• Collateral Management fee: one half of one percent (.5%) per annum of the averageoutstanding loan balance to monitor and to service this loan and to monitor and managecollateral.

• Processing Fees: $150 per wire for the first advance per week and $450 for anyadditional advance within same week.

• Unused Line Fee: Borrowers shall pay DIP Lender an unused line fee of one half of onepercent (.5%) per annum of the average unused portion of the DIP Revolving Facility.

• Exit fee: Borrowers shall pay one percent (1%) of the Facility Amount upon the earlierof the Maturity Date and exit from bankruptcy.

• Fees & Expenses: Borrowers shall pay all reasonable fees and expenses related to theunderwriting, documentation, bankruptcy court approval, closing process, administrationand enforcement of the loan, including without limitation the reasonable fees of loan


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documentation and bankruptcy counsel.

DIP Revolving Credit Agreement, pg. 7-8, Fees

Budget Bankruptcy Rule 4001 (c)(1)(B) LBR 4001- 2(a)(2)

Budget: The initial budget is attached as Exhibit 1 to the Interim Order.

Budget Variance: The actual total cash receipts and cash disbursement from operations line items (which shall not and do not include Professional Fees) shall not vary unfavorably (including any amounts deemed to roll over from a previous week due to not being spent) by (i) more than ten percent (10%) per line item on a trailing three week basis; or (ii) ten percent (10%) per line item on a cumulative basis for that portion of the Budget period then ended.

DIP Revolving Credit Agreement, pg. 2, Budget and Variance; pg. 14, Other Definitions

Interim Order, ¶ 2.b

Variance Covenant Bankruptcy Rule 4001(c)(l)(B) LBR 4001- 2(a)(2)

The Borrowers will need to provide a Budget Variance Report which means a current report that: (i) details the actual amount of cash receipts and disbursements for the prior week for each line item included in the Budget (on a weekly and cumulative basis), (ii) compares such actual cash receipts and disbursements (on a line item by line item basis) with the weekly and cumulative budgeted amounts for each such line item set forth in the Budget for such period, and (iii) provides an explanation for all variances between budgeted and actual amounts.

DIP Revolving Credit Agreement, pg. 14, Other Definitions

Liens and Priorities Bankruptcy Rule 4001(c)(l)(B)(i) LBR 4001- 2(a)(4)

All obligations of the Borrowers to the DIP Lender in connection with the DIP Revolving Facility, including all principal and interest, costs, fees and expenses (collectively, the “DIP Revolving Obligations”), shall be secured by valid, binding, continuing, enforceable, non-avoidable, and automatically and properly perfected first-priority security interests and liens in substantially all of the assets of the Borrowers (collectively, the “Collateral”), with such priority exceptions as noted herein.

The DIP Revolving Lender shall receive Liens on all of the Collateral pursuant to sections 364(c)(2), 364(c)(3) and 364(d) of the Bankruptcy Code (the “DIP Collateral”), which Liens shall be (A) solely as to the Term Loan Priority Collateral, whether arising prepetition or postpetition, junior only to any Liens of the the DIP Term Lenders and Term Loan Lenders, and to any valid, enforceable, and non-avoidable Prepetition Prior Liens, (B) as to the Revolving Loan Priority Collateral arising before the Petition Date, senior to all other liens and interests other than any Prepetition Prior Liens, (C) as to any Collateral arising postpetition that falls within the definition of Revolving Loan Priority Collateral, senior to all other liens and interests, and (D) as to any New DIP Collateral, pari passu with the Liens of the Term Loan Lenders and senior to all other liens and interests.

Further, subject to the Intercreditor Agreement, pursuant to section 364(c)(1) of the Bankruptcy Code, superpriority administrative claims having recourse to all prepetition and postpetition property of the Debtors’ estates, now owned or hereafter acquired and the proceeds of each of the foregoing, and having super-priority over any and all administrative expenses and claims, including administrative expenses of the kind specified in or ordered pursuant to 11 U.S.C. §§ 105, 326, 327, 328, 330, 331, 361, 362, 363, 364, 365, 503, 506, 507(a), 507(b), 546, 552, 1113 and 1114, and pari passu with the super-priority administrative claims of the DIP Term Lender under the DIP Facility.

DIP Revolving Credit Agreement, pg. 3-4, Collateral, Priority and Security; pg. 6-7, Lien Validation and Perfection

Interim Order, ¶ 9.B, 12


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Liens on Avoidance Actions LBR 4001- 2(a)(4)

Subject to entry of the Final Order, the Adequate Protection Liens shall encumber and the DIP Collateral shall include any Avoidance Proceeds.

DIP Revolving Credit Agreement, pg. 5, Collateral, Priority and Security

Interim Order, ¶ 8.B

Events of Default Bankruptcy Rule 4001(c)(l)(B) LBR 4001- 2(a)(10), (11)

Events of Default is defined as:

• James Fleet, or another Chief Restructuring Officer acceptable to DIP Revolving Lender in its sole discretion, shall cease to be engaged by the Debtors.


• Filing or support of a proposed plan of reorganization by any Debtor that does not provide for the indefeasible payment in full and in cash of Debtors’ obligations outstanding under the DIP Revolving Facility, unless otherwise agreed in writing by DIP Revolving Lender in its sole discretion.

• Entry of an order confirming (or the filing of any motion or pleading requesting confirmation of) a plan of reorganization that does not require the indefeasible repayment in full, in cash of the DIP Revolving Facility as of the effective date of the plan, unless otherwise agreed in writing by DIP Revolving Lender in its sole discretion.

• Appointment of a trustee under Section 1104 of the Bankruptcy Code without the express written consent of DIP Revolving Lender, or the filing of any motion or other pleading requesting such relief which the Debtors fail to timely oppose.

• Appointment of an examiner with enlarged powers (powers beyond those set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code without the prior written consent of DIP Revolving Lender, or the filing of a motion or other pleading requesting such relief which the Debtors fail to timely oppose.

• Entry of an order by the Bankruptcy Court amending, supplementing, staying, vacating or otherwise modifying the DIP Revolving Facility, the Interim Order or Final Order approving the DIP Revolving Facility, without the prior written consent of DIP Revolving Lender or the filing of a motion or other pleading requesting such relief which the Debtors fail to timely oppose.

• Any attempt by any Debtor to obtain, or if any other party in interest obtains, an order of the Bankruptcy Court or other judgment, and the effect of such order or judgment is to, invalidate, reduce or otherwise impair DIP Revolving Lender’s claims, or to subject any of DIP Revolving Lender’s collateral to a surcharge pursuant to Section 506(c) of the Bankruptcy Code.

• Any Debtor shall request approval of any postpetition financing, other than the DIP Revolving Facility, that would not immediately repay all DIP Revolving Facility obligations, in full, in cash, on the date of the closing of such postpetition financing.


• Entry of an order granting liens or claims that are senior or pari passu to the liens granted in favor of DIP Revolving Lender as the DIP Lender under the Revolving DIP Loan Documents.

• Any party in interest (including the Debtor) shall assert that any of the DIP Liens are invalid, or any DIP Liens granted to the DIP Revolving Lender shall be determined to be invalid.

• Any payment on, or application for authority to pay any pre-petition claim owing to terminated employees or lease rejection damages without prior


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written consent of DIP Revolving Lender or as otherwise set forth in the Budget.

• If at any time, the Investment Banker ceases to be engaged by the Debtors,ceases to be involved in the sales process, or the sales process is halted withoutDIP Revolving Lender’s consent.

• A final order is entered granting any creditor with a claim in excess of$100,000 relief from the automatic stay.

• Failure to make all payments under the DIP Revolving Facility when due.• Failure to pay any post-petition material indebtedness.• Breach of any covenant set forth in any DIP Revolving Loan Documents.• Breach of any covenant set forth in any DIP Term Facility document or

agreement.• Any material representation or warranty by any Debtor is incorrect or

misleading in any material respect when made.• Exclusivity shall have been terminated or any Debtor shall have agreed to any

such termination.• After entry thereof, either of the Sale Procedure Order or the Sale Order shall

cease to be in full force and effect, shall have been reversed, stayed, vacated orsubject to stay pending appeal or shall have been modified or amended withoutthe prior written consent of DIP Revolving Lender.

• The “Stalking Horse” bidder designated in the motion seeking approval of theSale Procedures Order shall drop out of the sale process or otherwise indicatethat it is unable to close the sale process within sixty (60) days of the PetitionDate.

• Any Debtor shall take (or support any other Person in taking) any action inorder to restrict or prohibit DIP Revolving Lender from submitting a “creditbid” for any assets of any Debtor.

• Any Challenge Action (as such term is defined in the Interim or Final Orderapproving the DIP Revolving Facility) is commenced against the DIPRevolving Lender.

• The commencement of an action or filing of a motion challenging the rightsand remedies of the DIP Revolving Lender under the DIP Revolving LoanDocuments or that is otherwise inconsistent with the DIP Revolving LoanDocuments.

• The Debtor fails to disburse the sale proceeds to the DIP Revolving Lendercontemporaneously with the closing of a sale of substantially all of their assets,subject to payment of the Carve Out.

• DIP Revolving Credit Agreement, pg. 12-13, Events of Default

Indemnification Bankruptcy Rule 4001(c)(1)(B)(ix)

The Debtors shall indemnify and hold CNH and its officers, directors, employees and agents (including all of their professionals) (each an “Indemnified Party”) harmless from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, all fees and disbursements of attorneys and other professionals) to which any Indemnified Party may become liable or which may be incurred by or asserted against any Indemnified Party, in each case in connection with or arising out of or by reason of any investigation, litigation or proceeding arising out of or relating to or in connection with the DIP Facility, the Revolving DIP Loan Documents, any obligation, or any act, event or transaction related or attendant thereto or any use or intended use of the proceeds of the DIP Facility, except to the extent the same is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence, willful misconduct, or intentional fraud. The indemnification terms and conditions of the Revolving Loan Documents are hereby incorporated in this term sheet.



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DIP Revolving Credit Agreement, pg. 13-14, Indemnification

Conditions of Borrowing Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(2)

Conditions Precedent. The DIP Revolving Facility includes conditions to initial borrowing that are customary and appropriate for similar debtor-in-possession financings of this type.

Conditions Precedent to All Credit Extensions. The DIP Revolving Facility includes conditions to initial borrowing that are customary and appropriate for similar debtor-in-possession financings of this type.

DIP Revolving Credit Agreement, pg. 8-9, Conditions Precedent to Initial DIP Revolving Facility Advance; Additional Conditions to Each Borrowing Under the DIP Revolving Facility

Affirmative and Negative Covenants; Releases Bankruptcy Rule 4001(c)(1)(B) LBR 4001-2(a)(9)

The DIP Revolving Facility contains affirmative and negative covenants customary and appropriate for similar debtor-in-possession financings of this type.

The Debtors, subject to the rights of another party to bring a Challenge Action during the Review Period, and upon entry of the Final Order, absolutely releases and forever discharges each of the DIP Revolving Lender and its affiliates, officers, directors, employees, attorneys, and other representatives from any and all claims and causes of action of every kind and nature that any Debtor may hold against such released parties.

DIP Revolving Credit Agreement, pg. 9-10, Affirmative and Negative Covenants; pg. 8, Release of Claims


Financial Covenants Bankruptcy Rule 4001(c)(1)(B) LBR 4001-2(a)(8)

The Debtors are subject to compliance with the Budget, subject only to Budget Variances.

DIP Revolving Credit Agreement, pg. 8, Financial Covenants

Roll Up LBR 4001-2(a)(7)

The total Facility Amount is inclusive of any obligations outstanding under the prepetition Revolving Loan Documents, which shall be paid, “rolled up” and deemed secured postpetition obligations under the DIP Revolving Facility.

DIP Revolving Credit Agreement, pg. 2, Facility Amount

Reaffirmation of Prepetition Loan Agreement LBR 4001-2(a)(12)

The Final Order shall include, among other terms and provisions, court approved stipulations of the Borrowers ratifying and reaffirming all of the prepetition debt outstanding to the DIP Revolving Lender and all prepetition liens securing such prepetition revolving loan debt.

DIP Revolving Credit Agreement, pg. 7, Final DIP Financing

8. Pursuant to Bankruptcy Rules 4001(b), (c) and (d), and LBR 4001-2, the

following chart is a concise statement and summary of the proposed material terms of the DIP

Term Facility:



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Borrower Bankruptcy Rule 4001(c)(1)(B) LBR 4001-2(a)(14)

All Debtors, with each jointly and severally liable to pay the commitment under the DIP Term Facility.

DIP Term Loan Agreement, pg. 1, Borrowers/Debtors

DIP Financing Lenders Bankruptcy Rule 4001(c)(1)(B)

SWK Funding LLC as DIP Term Agent and DIP Term Lender

DIP Revolving Credit Agreement, pg. 1, Agent, Lender

Interim Order, Introduction

Reporting Information Bankruptcy Rule 4001(c)(l)(B) LBR 4001- 2(a)(2)

Same as DIP Revolving Facility

Entities with Interests in Cash Collateral Bankruptcy Rule 4001(b)(l)(B)(i)


Term Bankruptcy Rule 4001(b)(l)(B)(iii), 4001(c)(1)(B) LBR 4001- 2(a)(10)


DIP Term Loan Agreement, pg. 3, Termination Date

Adequate Protection Bankruptcy Rules 4001(b)(l)(B)(iv), 4001(c)(1)(B)(ii) LBR 4001-2(a)(4)

Adequate Protection. The adequate protection package includes:

• The adequate protection lien, including a first priority lien and security interest ;replacement liens in all DIP Collateral;

• A superpriority administrative expense claim pursuant to section 507(b) of theBankruptcy Code;

• Payments of interest on the prepetition Revolving Loan Debt at the non-default rateunder the Revolving Loan Documents on a current basis; and

• payments or reimbursement in cash for any and all fees, costs, expenses, and charges(including the reasonable fees, costs, and expenses of counsel and financial advisors forthe Revolving Loan Lender) to the extent, and at the times, payable under the RevolvingLoan Documents, including any unpaid fees, costs, and expenses accrued prior to thePetition Date, whether or not budgeted in the approved budget, and without further notice(with respect to postpetition professional fees, costs, and expenses), motion, orapplication to, order of, or hearing before, the bankruptcy court before which the casesare pending.

DIP Term Loan Agreement, pg. 5, Super-Priority Administrative Claim; Collateral Security; pg. 8-9, Adequate Protection


Waiver/Modification of the Automatic Stay Bankruptcy Rule 4001(c)(1)(B)(iv)


Carve Out Bankruptcy Rule 4001(c)(1)(B)



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LBR 4001- 2(a)(5) DIP Term Loan Agreement, pg. 17-19, Other Definitions


506(c) Waiver Bankruptcy Rule 4001(c)(l)(B)(x)


Section 552(b) Bankruptcy Rule 4001(c)(l)(B)


Commitment Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(1)

Roll Up LBR 4001-2(a)(7)

Commitment of up to $1,600,000, inclusive of any amounts advanced under the Pre-Petition Credit Agreement from and after the date of the 5th amendment to the Pre-Petition Credit Agreement.

DIP Term Loan Agreement, pg. 2, Amount and Type of Facility

Interest Rates Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(3)

Non-Default Interest Rate. Interest shall accrue at a per annum floating rate equal to the non-default rate in place under the Pre-Petition Credit Agreement immediately before the Petition Date.

Default Interest. Effective immediately upon the occurrence of an Event of Default under the Revolving DIP Loan Documents, unless waived in writing by CNH, interest on the outstanding loans under the DIP Revolving Facility shall accrue at a rate that is 3% per annum in excess of the Non-Default Interest Rate.

DIP Term Loan Agreement, pg. 3-4, Non-Default Interest Rate and Payment Terms; Default Interest Rate and Letter of Credit Fee

Milestones Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(2)

Sale Process LBR 4001-2(a)(12)


DIP Term Loan Agreement, pg. 11-12, Sales Process


Challenge Period Bankruptcy Rule 4001(c)(l)(B) LBR 4001- 2(a)(8)



Use of DIP Financing Facility and Cash Collateral Bankruptcy Rule 4001(b)(l)(B)(ii) LBR 4001- 2(a)(2)

Limitation on Use of Proceeds LBR 4001-2(a)(9)

Borrowers shall use the proceeds solely for the following purposes (and to the extent identified in the Budget): (a) to fund, after application of all other available cash, post-petition operating expenses and working capital needs of the Debtors, including, but not limited to, those activities required to remain in, or return to, compliance with laws in accordance with 28 U.S.C. § 1930; (b) to pay interest, fees and expenses to SWK in accordance with this DIP Term Loan Agreement (whether or not such amounts are reflected in the Budget); (c) to fund fees and expenses incurred in connection with the 363 Sale (as defined below); (d) to pay permitted pre-petition claim payments and adequate protection payments, if any; (e) to pay Professional Fees provided for in the Budget (subject to all limitations set forth herein); and (f) to pay certain other costs and expenses of administration of the chapter 11 cases.


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No proceeds of the DIP Facilities or Cash Collateral shall be used to:

• permit the Debtors or any other party-in-interest to institute any proceeding to determine (i) the validity, perfection, or priority of any security interests in favor of the Prepetition Revolving Secured Parties, the Prepetition Term Secured Parties, the DIP Revolving Secured Parties, or the DIP Term Secured Parties or (ii) the enforceability of any of the Debtors’ obligations under, or the obligations of any guarantor under, the Prepetition Revolving Loan Documents, Prepetition Term Loan Documents, DIP Revolving Financing Documents, or DIP Term Financing Documents;

• investigate, commence, prosecute or defend (or support any other person or entity in investigating, commencing, prosecuting or defending) any claim, motion, proceeding or cause of action against the Prepetition Revolving Secured Parties, the Prepetition Term Secured Parties, the DIP Revolving Secured Parties, or the DIP Term Secured Parties or any of their agents, attorneys, advisors or representatives, including, without limitation, claims or causes of action relating to lender liability or subordination claims;

• investigate, commence, prosecute, or defend (or support any other person or entity in investigating, commencing, prosecuting, or defending) any claim or proceeding or cause of action to disallow or challenge the obligations of any Debtor or guarantor under the Prepetition Revolving Loan Documents, the Prepetition Term Loan Documents, the DIP Revolving Financing Documents, or the DIP Term Financing Documents; provided, however, that a Statutory Committee (if any) and its professionals shall be allowed to use proceeds of the DIP Revolving Facility, DIP Term Facility, or Cash Collateral in a collective amount not to exceed ten thousand dollars ($25,000) to investigate the validity of the Prepetition Term Liens and Prepetition Revolving Liens (the “Committee Budget”); or

• fund any acquisitions, capital expenditures, capital leases, or similar expenditures other than those specifically set forth in the Budget.

DIP Term Loan Agreement, pg. 4, Use of Proceed

Interim Order, ¶ 3

Stipulations to Prepetition Liens and Claims Bankruptcy Rule 4001(c)(1)(B)(iii) LBR 4001- 2(a)(4)

As of the Petition Date, without prejudice to the rights of third parties or any Statutory Committee, the Debtors admit, represent, and stipulate as to certain stipulations regarding the validity and extent of the DIP Revolving Lender’s claims and liens.

DIP Term Loan Agreement, pg. 7, Lien Validation and Perfection

Interim Order, ¶ F, 26.B

Waiver/Modification of Applicability of Nonbankruptcy Law Relating to Perfection or Enforceability of Liens Bankruptcy Rule 4001(c)(1)(B)(vii)


Repayment Features LBR 4001- 2(a)(13)

The Debtors promise and agree, jointly and severally, to pay to the DIP Revolving Lender all DIP Revolving Obligations, together with interest thereon accruing pursuant to the Revolving DIP Loan Documents, in full, in cash, at the times set forth in the Revolving DIP Loan Documents, but no later than the Termination Date.

Payments shall be made of interest-only, monthly in arrears on the outstanding principal balance; principal and all other DIP Revolving Obligations due in full on the Maturity Date.


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Mandatory Repayment. Upon an Event of Default, the DIP Lender Parties may demand repayment of DIP Facilities obligations then outstanding.

DIP Term Loan Agreement, pg. 4, Loan Payments


Fees Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(3), (16)

The Debtors shall pay all fees and other charges payable in the amounts and at the times as set forth in the prepetition credit agreement with the DIP Term Lender in relation to the full amount of the commitment under the DIP Term Facility, other than any exit or origination fees set forth in the prepetition credit agreement with the DIP Term Lender.

Debtors shall also pay to DIP Term Lender an origination fee upon the closing of the DIP Term Facility equal to two percent (2%) of all new funds advanced pursuant to the DIP Term Facility.

Debtors shall promptly pay or reimburse DIP Term Agent when invoiced for all reasonable costs and expenses of counsel (including, without limitation, local counsel) and financial advisors for DIP Term Agent relating to the DIP Term Facility and the administration and interpretation of, and the enforcement of remedies under, the DIP Term Facility, regardless of whether such amounts were incurred prior to or after the Petition Date, and including all due-diligence, including but not limited to environmental due-diligence, duplication or printing costs, consultation, travel, and attendance at court hearings, regardless of whether the DIP Term Facility is consummated. DIP Term Agent shall have the right to charge the DIP Term Facility for any such fees and costs. Failure to pay such fees and expenses within ten days of delivery of the applicable invoice shall be an Event of Default under the DIP Term Facility, provided that DIP Term Agent shall concurrently provide copies of any invoices to the U.S. Trustee and the Committee (if any) and allow such parties at least ten days to review and object to any fees or expenses requested therein. If any objection is asserted, the Bankruptcy Court shall decide the issue and the Debtors shall not be required to pay any disputed portion of such fees or expenses until the matter is resolved.

DIP Term Loan Agreement, pg. 2-3, Fees; pg. 9, Agent Fees and Expenses

Budget Bankruptcy Rule 4001 (c)(1)(B) LBR 4001- 2(a)(2)

Budget: The initial budget is attached as Exhibit 1 to the Interim Order.

Budget Variance: The initial budget is subject to the Budget Variance. The actual total cash receipts and cash disbursement from operations line items (which shall not and do not include Professional Fees) shall not vary unfavorably (including any amounts deemed to roll over from a previous week due to not being spent) by (i) more than ten percent (10%) per line item on a trailing three week basis; or (iii) five percent (5%) per line item on a cumulative basis for that portion of the Budget period then ended.

DIP Term Loan Agreement, pg. 2, Budget and Variance; pg. 16, Other Definitions

Interim Order, ¶ 2.b

Variance Covenant Bankruptcy Rule 4001(c)(l)(B) LBR 4001- 2(a)(2)

The Borrowers will need to provide a Budget Variance Report which means a current report that: (i) details the actual amount of cash receipts and disbursements for the prior week for each line item included in the Budget (on a weekly and cumulative basis), (ii) compares such actual cash receipts and disbursements (on a line item by line item basis) with the weekly and cumulative budgeted amounts for each such line item set forth in the Budget for such period, and (iii) provides an explanation for all variances between budgeted and actual amounts.

DIP Term Loan Agreement, pg. 16, Other Definitions

Liens and Priorities Bankruptcy Rule 4001(c)(l)(B)(i)

The DIP Term Facility (including accrued interest, fees, costs and expenses) shall be secured by first priority senior and priming liens and security interests (the “DIP Term Liens”) in all of the Debtors’ property, but subject to the limitations set forth herein and in the Interim Order and Final Order,


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LBR 4001- 2(a)(4) including, without limitation, all of Debtors’ existing and future acquired property and interests of any nature whatsoever, real and personal, tangible and intangible, accounts receivable, general intangibles, payment intangibles, supporting obligations, investment property, commercial tort claims, inventory, rolling stock, machinery, equipment, subsidiary capital stock, chattel paper, documents, instruments, deposit accounts, contract rights, and tax refunds of the Debtors, excluding only Avoidance Actions, but including, subject to entry of the Final Order, Avoidance Proceeds (collectively, the “DIP Collateral”).

The DIP Term Lien shall be a first priority senior and priming lien upon the DIP Collateral, subject and junior only to: (1) with respect to DIP Collateral constituting Term Loan Priority Collateral (as such term is defined in the Intercreditor Agreement), (a) the Carve-Out, and (b) valid, enforceable, properly perfected, and unavoidable prepetition Liens (including any Liens that are perfected after the Petition Date that are afforded priority due to the express relation back of the perfection of such lien to a date prior to the Petition Date as permitted by Bankruptcy Code section 546(b)) that are senior to both the liens securing obligations under both the Revolving Loan Documents and Pre-Petition Loan Documents (“Senior Third Party Liens”); (2) with respect to DIP Collateral constituting Revolving Loan Priority Collateral (as such term is defined in the Intercreditor Agreement), (a) the Carve-Out, (b) Senior Third Party Liens, and (c) the liens securing the DIP Revolving Facility, and (d) the liens securing obligations under the Revolving Loan Documents, along with any adequate protection liens furnished in respect of such Revolving Loan Document obligations’; and (3) respect to any DIP Collateral that arises after the Petition Date, would not fit within the definition of Revolving Loan Priority Collateral (as defined in the Intercreditor Agreement) or Term Loan Priority Collateral (as defined in the Intercreditor Agreement), and was not or could not have been subject to a lien prior to the Petition Date securing the obligations under the Revolving Loan Documents or Pre-Petition Loan Documents (such DIP collateral defined in this subsection (3), the “New DIP Collateral”), (a) the Carve-Out, but pari-passu with any liens of the Revolving Lender upon such New DIP Collateral.

Further, subject to the Intercreditor Agreement, pursuant to section 364(c)(1) of the Bankruptcy Code, superpriority administrative claims having recourse to all prepetition and postpetition property of the Debtors’ estates, now owned or hereafter acquired and the proceeds of each of the foregoing, and having super-priority over any and all administrative expenses and claims, including administrative expenses of the kind specified in or ordered pursuant to 11 U.S.C. §§ 105, 326, 327, 328, 330, 331, 361, 362, 363, 364, 365, 503, 506, 507(a), 507(b), 546, 552, 1113 and 1114, and pari passu with the super-priority administrative claims of the DIP Revolving Lender under the DIP Facility.

DIP Term Loan Agreement, pg. 6, Collateral Security; pg. 7, Lien Validation and Perfection

Interim Order, ¶ 9.B, 12

Liens on Avoidance Actions LBR 4001- 2(a)(4)

Subject to entry of the Final Order, the Adequate Protection Liens shall encumber and the DIP Collateral shall include any Avoidance Proceeds.

DIP Term Loan Agreement, pg. 9, Adequate Protection

Interim Order, ¶ 8.B

Events of Default Bankruptcy Rule 4001(c)(l)(B) LBR 4001- 2(a)(10), (11)


DIP Term Loan Agreement, pg. 13-15, Events of Default

Indemnification Bankruptcy Rule 4001(c)(1)(B)(ix)


DIP Term Loan Agreement, pg. 15-16, Indemnification


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Conditions of Borrowing Bankruptcy Rule 4001(c)(1)(B) LBR 4001- 2(a)(2)

Conditions Precedent. The DIP Term Facility includes conditions to initial borrowing that are customary and appropriate for similar debtor-in-possession financings of this type.

Conditions Precedent to All Credit Extensions. The DIP Term Facility includes conditions to initial borrowing that are customary and appropriate for similar debtor-in-possession financings of this type.

DIP Term Loan Agreement, pg. 9-10, Conditions Precedent to Initial DIP Term Facility Advance; Additional Conditions to Each Borrowing Under the DIP Revolving Facility

Affirmative and Negative Covenants; Releases Bankruptcy Rule 4001(c)(1)(B) LBR 4001-2(a)(9)

The DIP Term Facility contains affirmative and negative covenants customary and appropriate for similar debtor-in-possession financings of this type.

The Debtors, subject to the rights of another party to bring a Challenge Action during the Review Period, and upon entry of the Final Order, absolutely releases and forever discharges each of the DIP Term Lender and its affiliates, officers, directors, employees, attorneys, and other representatives from any and all claims and causes of action of every kind and nature that any Debtor may hold against such released parties.

DIP Term Loan Agreement, pg. 10-11, Affirmative and Negative Covenants; pg. 7, Release of Claims


Reaffirmation of Prepetition Loan Agreement LBR 4001-2(a)(12)

Upon entry of the Final Order, the Debtors’ obligations to SWK for advances made under the Pre-Petition Credit Agreement and other Pre-Petition Loan Documents (including accrued, unpaid interest from the Petition Date) from and after the fifth amendment of the Pre-Petition Credit Agreement shall be deemed obligations under the DIP Term Facility.

DIP Term Loan Agreement, pg. 5, Pre-Petition Obligations

Prepetition Capital Structure10

9. The Debtors’ prepetition capital structure includes approximately $24 million in

structured debt as of the Petition Date. The Debtors’ prepetition structured debt consists of:

(a) the Revolving Credit Facility, (b) the Term Loan Facility, and (c) the Subordinated

Promissory Notes. The Revolving Credit Facility and Term Loan Facility are subject to an

Intercreditor Agreement.11 The Intercreditor Agreement governs the relative contractual rights

10 The following summary is qualified in its entirety by reference to the operative documents, agreements,schedules, and exhibits. In the event of inconsistency between this summary (including the defined terms therein), the source documents shall control and govern. 11 The “Intercreditor Agreement” means that certain Intercreditor Agreement, dated April 29, 2016, (as amended, modified, and supplemented from time to time). by and between CNH and SWK.


22

of the lenders under the Revolving Credit Facility and Term Loan Facility and the relative

priority of CNH and SWK in the Debtors’ collateral.

I. Prepetition Indebtedness

10. As of the Petition Date, the Debtors’ prepetition structured indebtedness can be

summarized as follows:

Indebtedness Principal Balance Outstanding

Revolving Credit Facility $4,810,224

Term Loan Facility $17,657,000

Subordinated Promissory Note $1,916,998

Total $24,384,212

These obligations are discussed below.

A. Prepetition Revolving Credit Facility.

11. In April 2016, Hooper Holmes, Inc. (“Hooper Holmes”) entered into that Credit

and Security Agreement with CNH, as amended (the “Revolving Credit Facility”).12 The

Revolving Credit Facility is an asset-based facility and provides the Debtors with proceeds for

general working capital purposes and capital expenditures. Under the Revolving Credit Facility,

the Debtors may borrow up to $10 million with an accordion up to $15 million during high-

volume months, at the discretion of CNH. Obligations under the Revolving Credit Facility are

secured by substantially all of the Debtors’ existing and after-acquired property, including, but

not limited to, their receivables (which are subject to a lockbox account arrangement), inventory,

and equipment.

12 The “Revolving Credit Facility” means that certain Credit and Security Agreement dated April 29, 2016, by and between SCM Specialty Finance Opportunities, Fund, L.P. and Hooper Holmes and subsidiaries (as amended, restated, modified, and supplemented from time to time).


23

B. Prepetition Term Loan Facility.

12. Hooper Holmes, as borrower, and SWK Funding LLC, as agent, sole lead

arranger and sole bookrunner, are parties to that certain Amended and Restated Credit

Agreement, amended and restated as of May 11, 2017 (as amended, restated, modified, or

supplemented from time to time) (the “Term Loan Facility”). The Term Loan Facility provides

the Debtors with additional working capital for general business purposes.

13. Borrowings under the Term Loan Facility are secured by a security interest in the

Debtors’ existing and after-acquired property, including, but not limited to, their receivables

(which are subject to a lockbox account arrangement), inventory, and equipment. All of the

other Debtors are guarantors of the obligations under the Term Loan Facility pursuant to that

Amended and Restated Guarantee and Collateral Agreement, dated May 11, 2017 (as amended,

restated, modified, or supplemented from time to time.

C. Subordinated Promissory Notes.

14. Prior to entry of the merger between Hooper Holmes, Inc. and Provant Health

Solutions, LLC (“PHS”), with PHS becoming a wholly-owned subsidiary of Hooper Holmes,

Inc. (the “Merger”), Century Equity Partners (“Century”) invested $2.5 million in PHS in the

form of subordinated, convertible debt pursuant to that certain Subordinated Promissory Note,

dated May 11, 2017, between Century and PHS (the “Subordinated Promissory Note”).

Immediately prior to closing of the Merger, approximately $0.4 million of the balance of the

Subordinated Promissory Note converted to equity in PHS. The remaining approximately $1.9

million of the Subordinated Promissory Note remains outstanding as subordinated debt. The

Subordinated Promissory Note is unsecured and subordinate to the Revolving Credit Facility and

the Term Loan Facility pursuant to the terms of the Subordinated Promissory Note.


24

D. Intercreditor Agreement.

15. Pursuant to the terms of the Intercreditor Agreement, the Revolving Credit

Facility holds a first priority lien versus the Term Loan Facility with respect to the “Revolving

Loan Priority Collateral,” which includes, among other things, accounts and books and records.

The Revolving Credit Facility’s priority in the Revolving Loan Priority Collateral is capped at

$17.25 million. The Term Loan Facility holds a first priority lien versus the Revolving Credit

Facility with respect to all Debtors’ assets not considered Revolving Loan Priority Collateral.

The Debtors’ Liquidity Needs and Marketing Efforts

I. The Debtors Cannot Prudently Operate their Businesses by Operating Only on a Cash Collateral Basis.

16. In connection with their liquidity struggles and the prospect of a chapter 11 filing,

the Debtors, with the assistance of their advisors, analyzed their cash needs and determined that

use of the Cash Collateral, alone, was insufficient to operate their business, and that additional

funding was necessary, for a number of factors. For example, additional financing is necessary

in order to: (a) fund working capital requirements and other operational expenses in connection

with the ordinary course operation of the Debtors’ business; (b) provide an appropriate liquidity

cushion for anticipated vendor contraction and tightening of trade terms, which began prior to

the commencement of these chapter 11 cases; (c) address the potential negative impact on

customer collections arising from the commencement of these chapter 11 cases; (d) send a strong

market signal that these chapter 11 cases are well-funded; (e) provide a stable platform for their

businesses; (f) fund the Debtors’ pursuit of a value-maximizing transaction for the benefit of

their stakeholders; and (g) satisfy the administrative expenses to be incurred.

17. The Debtors enter chapter 11 with limited available liquidity, which is

significantly below the optimal level required to preserve and maximize value. The Debtors


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further anticipate that vendors and service providers may continue to either contract or eliminate

trade terms entirely, further exacerbating the Debtors’ strained liquidity position. Further,

customers may seek other alternative products and services, and vendors and suppliers may

refuse to do business with the Debtors if there exists a market perception that these chapter 11

cases are not well-funded and the Debtors cannot effectuate their value-maximizing transaction.

18. The Debtors therefore require immediate access to liquidity to stave off what

would be substantial damage to their operations. The Debtors may not have sufficient liquidity to

continue their business operations in the ordinary course to the material detriment of customers,

creditors, employees, and other parties in interest, jeopardizing these chapter 11 cases before

they have even begun. Therefore, the Debtors have an immediate need to incrementally access

the DIP Facilities on an interim basis and throughout the pendency of these chapter 11 cases.

19. Absent the immediate relief requested by this Motion, the Debtors face a material

risk of substantial, irreparable, and ongoing harm. Access to Cash Collateral and new capital

under the DIP Facilities, both on an interim basis and throughout these chapter 11 cases, will

ensure the Debtors have sufficient funds to preserve and maximize the value of its estates,

responsibly administer these chapter 11 cases, and consummate a value-maximizing transaction.

II. The Debtors Actively Marketed and Aggressively Developed Their Proposed Financing.

20. Recognizing a financing need, the Debtors, with the assistance of Raymond James

and their other advisors, undertook a marketing process that involved discussions with a variety

of financial institutions, lenders, and CNH and SWK, the Debtors’ incumbent secured lenders. In

this process, and as noted above, the Debtors solicited twelve additional parties, including five

commercial banks and seven alternative lenders.


26

21. Raymond James, together with the Debtors, identified these potential lenders

based on a number of factors, including, among other things, their ability to complete diligence

quickly, experience providing debtor-in-possession financing, and their knowledge of the

Debtors’ complex business operations. Ultimately, the Debtors only received debtor-in-

possession financing proposals from the Prepetition Secured Lenders.

22. Following extensive, arms’-length negotiations, the Debtors were able to secure

the proposed DIP Facilities on highly favorable terms to these estates. The proposed DIP

Facilities represent a negotiated resolution with the lenders under the Debtors’ Prepetition

Revolving Credit Facility and Term Loan Facility, where the Debtors are able to obtain a

substantial financing package on market terms and without overly burdensome case controls.

Thus, the Debtors determined that their proposed DIP Financing provides the best path forward

for the Debtors under the circumstances to both fund these chapter 11 cases while providing the

flexibility necessary for the Debtors to maximize value for all stakeholders.

Basis for Relief I. Entering into the DIP Documents Is an Exercise of the Debtors’ Sound Business

Judgment.

23. Section 364 of the Bankruptcy Code authorizes a debtor to obtain secured or

superpriority financing under certain circumstances as described in greater detail below.

Provided that an agreement to obtain secured credit does not run afoul of the provisions of, and

policies underlying, the Bankruptcy Code, courts grant debtors considerable deference in acting

in accordance with their sound business judgment in obtaining such credit. See In re Barbara K.

Enters., Inc., No. 08-11474, 2008 WL 2439649, at *14 (Bankr. S.D.N.Y. June 16, 2008)

(explaining that courts defer to a debtor’s business judgment “so long as a request for financing

does not ‘leverage the bankruptcy process’ and unfairly cede control of the reorganization to one


27

party in interest”); In re Ames Dep’t Stores, Inc., 115 B.R. 34, 40 (Bankr. S.D.N.Y. 1990)

(“[C]ases consistently reflect that the court’s discretion under section 364 [of the Bankruptcy

Code] is to be utilized on grounds that permit [a debtor’s] reasonable business judgment to be

exercised so long as the financing agreement does not contain terms that leverage the bankruptcy

process and powers or its purpose is not so much to benefit the estate as it is to benefit a party-

ininterest.”); accord In re Farmland Indus., Inc., 294 B.R. 855, 881 (Bankr. W.D. Mo. 2003)

(“the applicable factors can be synthesized as follows: (1) That the proposed financing is an

exercise of sound and reasonable business judgment . . . .”).

24. Specifically, to determine whether the business judgment standard is met, a court

need only “examine whether a reasonable business person would make a similar decision under

similar circumstances.” In re Exide Techs., 340 B.R. 222, 239 (Bankr. D. Del. 2006); see also In

re Curlew Valley Assocs., 14 B.R. 506, 513–14 (Bankr. D. Utah 1981) (noting that courts should

not second guess a debtor’s business decision when that decision involves “a business judgment

made in good faith, upon a reasonable basis, and within the scope of [the debtor’s] authority

under the [Bankruptcy] Code”).

25. Furthermore, in determining whether the Debtors have exercised sound business

judgment in deciding to enter into the DIP Documents, the Court may appropriately take into

consideration non-economic benefits to the Debtors offered by a proposed postpetition facility.

For example, in In re ION Media Networks, Inc., the Bankruptcy Court for the Southern District

of New York held that:

Although all parties, including the Debtors and the Committee, are naturally motivated to obtain financing on the best possible terms, a business decision to obtain credit from a particular lender is almost never based purely on economic terms. Relevant features of the financing must be evaluated, including noneconomic elements such as the timing and certainty of closing, the impact on creditor constituencies and the likelihood of a successful reorganization. This is


28

particularly true in a bankruptcy setting where cooperation and established allegiances with creditor groups can be a vital part of building support for a restructuring that ultimately may lead to a confirmable reorganization plan. That which helps foster consensus may be preferable to a notionally better transaction that carries the risk of promoting unwanted conflict.

No. 09-13125 (Bankr. S.D.N.Y. July 6, 2009).

26. The Debtors’ determination to move forward with the DIP Facilities is an exercise

of its sound business judgment following an arm’s-length process and careful evaluation of

available alternatives. Specifically, the Debtors and their advisors determined that postpetition

financing will create certainty with respect to cash flows necessary for the administration of

these chapter 11 cases. The Debtors negotiated the DIP Loan Agreements and other DIP

Financing Documents with the DIP Lender Parties in good faith, at arm’s length, and with the

assistance of its advisors, and the Debtors believes that they have obtained the best financing

available because: (a) the DIP Facilities permit the Debtors to avoid value-destructive priming

issues; (b) third-party lenders were unwilling to provide viable debtor-in-possession financing

junior to the Prepetition Secured Lenders due to the Debtors’ high level of existing secured debt

obligations; and (c) the DIP Facilities present the best financing reasonably available to the

Debtors with significant availability, competitive pricing, and without overly burdensome case

controls. Finally, entry into the DIP Facilities with the Debtors’ Prepetition Secured Lenders

will likely avoid a costly priming and adequate protection fight at the outset of these chapter 11

cases that would cause significant uncertainty among the Debtors’ vendors, employees,

customers, and others. Accordingly, the Bankruptcy Court should authorize the Debtors’ entry

into the DIP Financing Documents, as it is a reasonable exercise of the Debtors’ business

judgment


29

II. The Debtors Should Be Authorized to Grant Liens and Superpriority Claims

27. The Debtors propose to obtain financing under the DIP Facilities by providing

security interests and liens as set forth in the DIP Financing Documents pursuant to section

364(c) of the Bankruptcy Code. Specifically, the Debtors propose to provide to the DIP Lender

Parties continuing, valid, binding, enforceable, non-avoidable, and automatically and properly

perfected postpetition security interests in and liens on the DIP Collateral, subject to the Carve

Out, which includes substantially all of the Debtors’ assets.

28. The statutory requirement for obtaining postpetition credit under section 364(c) is

a finding, made after notice and hearing, that a debtor is “unable to obtain unsecured credit

allowable under Section 503(b)(1) of [the Bankruptcy Code].” 11 U.S.C. § 364(c); see In re

Crouse Grp., Inc., 71 B.R. 544, 549 (Bankr. E.D. Pa. 1987) (secured credit under section 364(c)

of the Bankruptcy Code is authorized, after notice and hearing, upon showing that unsecured

credit cannot be obtained). Courts have articulated a three-part test to determine whether a

debtor is entitled to financing under section 364(c) of the Bankruptcy Code. Specifically, courts

look to whether:

a. the debtor is unable to obtain unsecured credit under section 364(b) of the Bankruptcy Code, i.e., by allowing a lender only an administrative claim;

b. the credit transaction is necessary to preserve the assets of the estate; and

c. the terms of the transaction are fair, reasonable, and adequate, given the circumstances of the debtor-borrower and proposed lenders.

See In re Ames Dep’t Stores, 115 B.R. at 37–40; see also In re St. Mary Hosp., 86 B.R. 393, 401-

02 (Bankr. E.D. Pa. 1988); Crouse Grp., 71 B.R. at 549.

29. The Debtors meet each part of this test. Due to the Debtors’ high level of existing

secured debt obligations, no third-party lenders were willing to provide postpetition financing

junior to the Prepetition Secured Lenders. Therefore, the Debtors, in consultation with their


30

advisors, concluded that any workable financing likely would require the support of, or be

provided by, the Debtors’ Prepetition Secured Lenders. Absent the DIP Facilities, which will

provide certainty that the Debtors will have sufficient liquidity to administer these chapter 11

cases, the value of the Debtors’ estates would be significantly impaired to the detriment of all

stakeholders. Given the Debtors’ circumstances, the Debtors believe that the terms of the DIP

Facilities, as set forth in the DIP Loan Agreements, are fair, reasonable, and adequate, all as

more fully set forth below. For all these reasons, the Debtors submit that it has met the standard

for obtaining postpetition financing.

30. In the event that a debtor is unable to obtain unsecured credit allowable as an

administrative expense under section 503(b)(1) of the Bankruptcy Code, section 364(c) provides

that a court “may authorize the obtaining of credit or the incurring of debt (1) with priority over

any or all administrative expenses of the kind specified in section 503(b) or 507(b) of [the

Bankruptcy Code]; (2) secured by a lien on property of the estate that is not otherwise subject to

a lien; or (3) secured by a junior lien on property of the estate that is subject to a lien.” 11 U.S.C.

§ 364(c). As described above, the Debtors are unable to obtain unsecured credit. Therefore,

approving superpriority claims in favor of the DIP Lender Parties is reasonable and appropriate.

31. Further, section 364(d) of the Bankruptcy Code provides that a debtor may obtain

credit secured by a senior or equal lien on property of the estate already subject to a lien, after

notice and a hearing, where the debtor is “unable to obtain such credit otherwise” and “there is

adequate protection of the interest of the holder of the lien on the property of the estate on which

such senior or equal lien is proposed to be granted.” 11 U.S.C. § 364(d)(1). Accordingly, the

Debtors may incur “priming” liens under the DIP Facilities if either (a) the Prepetition Secured

Lenders have consented or (b) the Prepetition Secured Lenders’ interests in collateral are


31

adequately protected. What constitutes adequate protection is decided on a case-by-case basis,

and adequate protection may be provided in various forms, including payment of adequate

protection fees, payment of interest, or granting of replacement liens or administrative claims. In

re Mosello, 195 B.R. 277, 289 (Bankr. S.D.N.Y. 1996) (“[T]he determination of adequate

protection is a fact-specific inquiry . . . left to the vagaries of each case.”); In re Realty Sw.

Assocs., 140 B.R. 360, 366 (Bankr. S.D.N.Y. 1992) (“‘Adequate protection’ is a question of fact

because it has as its linchpin the concept of value, and therefore is determined on a case-by-case

basis.”) (citation omitted); In re Beker Indus. Corp., 58 B.R. 725, 736 (Bankr. S.D.N.Y. 1986)

(the application of adequate protection “is left to the vagaries of each case, but its focus is

protection of the secured creditor from diminution in the value of its collateral during the

reorganization process”) (citation omitted).

32. The Debtors respectfully submit that their proposal more than satisfies the

requirements of “adequate” protection. As described more fully in the Interim Order, the Debtors

propose to provide a variety of adequate protection to protect the interests in the Debtors’

property of the Prepetition Secured Lenders from any diminution in value of the Cash Collateral

(as well as the Prepetition Collateral) resulting from the use of the Cash Collateral by the Debtors

and the imposition of the automatic stay, subject, in each case, to the Carve Out (collectively, the

“Adequate Protection Obligations”):13

a. Valid and automatically perfected liens and security interests in and upon the DIP Collateral;

b. superpriority administrative claims under section 507(b) of the Bankruptcy Code;

13 The following summary is qualified in its entirety by reference to the DIP Loan Agreements and the Orders. In the event of inconsistency between this summary (including the defined terms therein), the DIP Loan Agreements and the Orders shall control and govern.


32

c. payment of the fees and expenses of certain of the Prepetition Secured Lenders; and

d. payment of fees and expenses.

The Debtors respectfully submit that this package is more than sufficient to constitute adequate

protection here as “[a]dequate protection, not absolute protection, is the statutory standard.” In re

Beker Indus. Corp., 58 B.R. at 741 (citation omitted).

33. Second, the Debtors believe the likely alternative available to these chapter 11

cases would be an expedited liquidation of the Debtors’ assets rather than the Debtors’ continued

operation as a going concern. Such an outcome would, in turn, undoubtedly decrease the value

available for all stakeholders. Thus, the DIP Facilities provide these parties with adequate

protection by enhancing the value of these parties’ collateral. The Bankruptcy Court has

recognized that a debtor’s ability to maintain business value by operating in the ordinary course

is itself a significant source of adequate protection. See In re Salem Plaza Assocs., 135 B.R. 753,

758 (Bankr. S.D.N.Y. 1992) (holding that a debtor’s use of cash collateral to pay operating

expenses, thereby “preserv[ing] the base that generates the income stream,” provided adequate

protection to the secured creditor); In re Constable Plaza Assocs., L.P., 125 B.R. 98, 104-05

(Bankr. S.D.N.Y. 1991) (finding equity cushion alone was adequate protection when cash

collateral was used to preserve value of a building pledged as collateral and noting such use

would “preserve or enhance the value of the building which, in turn, will protect the collateral

covered by [the] mortgage”).

III. No Comparable Alternatives to the DIP Facilities Is Reasonably Available. 34. A debtor need only demonstrate “by a good faith effort that credit was not

available without” the protections afforded to potential lenders by sections 364(c) of the

Bankruptcy Code. In re Snowshoe Co., Inc., 789 F.2d 1085, 1088 (4th Cir. 1986); see also In re


33

Plabell Rubber Prods., Inc., 137 B.R. 897, 900 (Bankr. N.D. Ohio 1992). Moreover, in

circumstances where only a few lenders likely can or will extend the necessary credit to a debtor,

“it would be unrealistic and unnecessary to require [the debtor] to conduct such an exhaustive

search for financing.” In re Sky Valley, Inc., 100 B.R. 107, 113 (Bankr. N.D. Ga. 1988), aff’d sub

nom. Anchor Sav. Bank FSB v. Sky Valley, Inc., 99 B.R. 117, 120 n.4 (N.D. Ga. 1989); see also

In re Ames Dep’t Stores, 115 B.R. at 37–39 (debtor must show that it made reasonable efforts to

seek other sources of financing under section 364(a) and (b)) (citing Snowshoe Co., 789 F.2d at

1088 (demonstrating that credit was unavailable absent the senior lien by establishment of

unsuccessful contact with other financial institutions in the geographic area)); In re Stanley

Hotel, Inc., 15 B.R. 660, 663 (D. Colo. 1981) (bankruptcy court’s finding that two national banks

refused to grant unsecured loans was sufficient to support conclusion that section 364

requirement was met).

35. As noted above, the Debtors do not believe that comparable alternative sources of

financing are reasonably available given the realities imposed by the Debtors’ existing capital

structure and the Debtors’ unsuccessful solicitation of alternative financing proposals.

Substantially all of the Debtors’ existing assets, including Cash Collateral, are encumbered by

the DIP Lender Parties. The Debtors conducted arm’s-length negotiations with the DIP Lender

Parties regarding the terms of the DIP Facilities.

36. Thus, the Debtors determined that the DIP Facilities provide the best opportunity

available to the Debtors under the circumstances to fund these chapter 11 cases. In addition to

evidence to be introduced at the hearing on the Interim Order if necessary, the Debtors submit

that the requirement of section 364 of the Bankruptcy Code that alternative credit on more

favorable terms be unavailable to the Debtors is satisfied.


34

IV. The Debtors Should Be Authorized to Use Postpetition Collateral, Including Cash Collateral.

37. Section 363 of the Bankruptcy Code generally governs the use of estate property.

Section 363(c)(2)(A) permits a debtor in possession to use cash collateral with the consent of the

secured party. Section 363(e) provides for adequate protection of interests in property when a

debtor uses cash collateral. Further, section 362(d)(1) of the Bankruptcy Code provides for

adequate protection of interests in property due to the imposition of the automatic stay. See In re

Cont’l Airlines, 91 F.3d 553, 556 (3d Cir. 1996) (en banc). While section 361 of the Bankruptcy

Code provides examples of forms of adequate protection, such as granting replacement liens and

administrative claims, courts decide what constitutes sufficient adequate protection on a case-by-

case basis. In re Mosello, 195 B.R. at 289 (“[T]he determination of adequate protection is a fact-

specific inquiry . . . left to the vagaries of each case.”); In re Realty Sw. Assocs., 140 B.R. at 366

(“‘Adequate protection’ is a question of fact because it has as its linchpin the concept of value,

and therefore is determined on a case-by-case basis.”) (citation omitted); In re Beker Indus.

Corp., 58 B.R. at 736 (the application of adequate protection “is left to the vagaries of each case,

but its focus is protection of the secured creditor from diminution in the value of its collateral

during the reorganization process”) (citation omitted).

38. The Debtors submit that the proposed Adequate Protection Obligations are

sufficient to protect the Prepetition Secured Lenders from any diminution in value to the Cash

Collateral and Prepetition Collateral and satisfies the requirements of “adequate” protection:

“[a]dequate protection, not absolute protection, is the statutory standard.” In re Beker Indus.

Corp., 58 B.R. at 741 (citation omitted).

39. In addition to the proposed Adequate Protection Obligations, the critical liquidity

provided by the proposed DIP Facilities permits the Debtors to continue as a going concern to


35

consummate a value-maximizing transaction. The Debtors submit that continuing as a going

concern provides additional adequate protection to the Prepetition Secured Lenders. Cf. In re

Salem Plaza Assocs., 135 B.R. at 758 (holding that debtor’s use of cash collateral from shopping

center to pay operating expenses, thereby “preserv[ing] the base that generates the income

stream,” provided adequate protection to the secured creditor); In re Constable Plaza Assocs.,

L.P., 125 B.R. at 104–05 (finding equity cushion alone was adequate protection when cash

collateral was used to preserve value of a building pledged as collateral and noting such use

would “preserve or enhance the value of the building which, in turn, will protect the collateral

covered by [the] mortgage”). Further, the incremental value generated by use of the proceeds of

the proposed DIP Facilities will inure to the ultimate benefit of the Debtors’ estates and their

stakeholders. Courts have held enhancement of collateral is a critical component of adequate

protection and have considered “whether the value of the debtor’s property will increase as a

result of the” use of the collateral. In re 495 Cent. Park Ave. Corp., 136 B.R. 626 (Bankr.

S.D.N.Y. 1992) (finding that improvements to collateral financed by postpetition financing

proceeds would improve collateral value in excess of loans and, therefore, provided adequate

protection); see In re Hubbard Power & Light, 202 B.R. 680 (Bankr. E.D.N.Y. 1996) (approving

postpetition financing to be used, in part, to fund cleanup costs of encumbered property

anticipated to improve the value of the collateral, thereby serving the goal of adequate

protection).

40. In light of the foregoing, the Debtors further submit, and the Prepetition Secured

Lenders agree, that the proposed Adequate Protection Obligations to be provided for the benefit

of the Prepetition Secured Lenders are appropriate. Thus, the Debtors’ provision of the

Adequate Protection Obligations is not only necessary to protect against any diminution in value


36

but is fair and appropriate under the circumstances of these chapter 11 cases to ensure the

Debtors are able to continue using the Cash Collateral, subject to the terms and limitations set

forth in the Interim Order, for the benefit of all parties in interest and their estates

V. The DIP Financing Fees are Reasonable and Should Be Approved

41. Under the DIP Financing Documents, the Debtors agreed, subject to Bankruptcy

Court approval, to pay certain fees to the DIP Agent and the DIP Lender Parties. The Debtors

and the DIP Lender Parties agree that these fees are an integral component of the overall terms of

the DIP Facilities, and required by the applicable DIP Lender Parties as consideration for the

extension of postpetition financing. Accordingly, the Bankruptcy Court should authorize the

Debtors to pay the fees provided under the DIP Financing Documents in connection with

entering into those agreements.

VI. Modification of the Automatic Stay Is Warranted

42. The proposed Interim Order further provides that the automatic stay is modified

as necessary to permit the Debtors to grant the DIP Liens to the DIP Lender Parties and to incur

all liabilities and obligations set forth in the Interim Order. Finally, the proposed Interim Order

provides that, following the occurrence of an Event of Default, the automatic stay shall be

vacated and modified to the extent necessary to permit the DIP Lender Parties to exercise all

rights and remedies in accordance with the DIP Financing Documents, or applicable law.

43. Stay modifications of this kind are ordinary and standard features of debtor-in-

possession financing arrangements, and, in the Debtors’ business judgment, are reasonable and

fair under the circumstances of these chapter 11 cases. See, e.g., In re BCBG Max Azria Global

Holdings, LLC, Case No. 17-10466 (SCC) (Bankr. S.D.N.Y. Mar. 28, 2017); In re Avaya, Inc.,

Case No. 17-10089 (SMB) (Bankr. S.D.N.Y. Mar. 10, 2017); In re Dacco Transmission Parts

(NY), Inc., Case No. 16-13245 (MKV) (Bankr. S.D.N.Y. December 23, 2016); In re Breitburn


37

Energy Partners LP, Case No. 16-11390 (SMB) (Bankr. S.D.N.Y. August 19, 2016); In re

Aéropostale, Inc., Case No. 16-11275 (SHL) (Bankr. S.D.N.Y. June 13, 2016).

VII. The DIP Lender Parties Should Be Deemed Good Faith Lenders under Section 364(e).

44. Section 364(e) of the Bankruptcy Code protects a good faith lender’s right to

collect on loans extended to a debtor, and its right in any lien securing those loans, even if the

authority of the debtor to obtain such loans or grant such liens is later reversed or modified on

appeal. Specifically, section 364(e) provides that:

The reversal or modification on appeal of an authorization under this section [364 of the Bankruptcy Code] to obtain credit or incur debt, or of a grant under this section of a priority or a lien, does not affect the validity of any debt so incurred, or any priority or lien so granted, to an entity that extended such credit in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and the incurring of such debt, or the granting of such priority or lien, were stayed pending appeal.

11 U.S.C. § 364(e). Because “good faith” is not defined in the Bankruptcy Code, courts often

look to case law under section 363(m). 7 Collier on Bankruptcy, 16th ed. ¶ 364.08, p. 37

(“Section 364(e) is consistent with section 363(m), which provides similar protection to a buyer

or lessee of property of the estate in a section 363 transaction.”). As one court in this district

explained, “the misconduct that would destroy a purchaser’s good faith status at a judicial sale

involves fraud, collusion between the purchaser and other bidders or the trustee, or an attempt to

take grossly unfair advantage of other bidders.” In re Pan Am Corp., No. 91 CIV. 8319 (LMM),

1992 WL 154200, at *4 (S.D.N.Y. June 18, 1992) (citing In re Rock Indus. Mach. Corp., 572

F.2d 1195, 1198 (7th Cir. 1978)); accord In re General Growth Properties, Inc., 423 B.R. 716,

722 (S.D.N.Y. 2010).

45. As explained in detail herein and in the Richards Declaration, the DIP Documents

are the result of the Debtors’ reasonable and informed determination that the DIP Lender Parties


38

offered the most favorable terms on which to obtain necessary postpetition financing. Following

extended arm’s-length, iterative, good faith negotiations between the Debtors and the DIP

Lender Parties, the Debtors were able to successfully leverage their other financing alternatives

in order to secure both operational flexibility and limited milestones. To say these negotiations

were hard-fought would be more than fair. General Growth Properties, 423 B.R. at 722 (finding

good faith based on testimony that the terms of the debtor-in-possession financing were

“vigorously negotiated at arm’s length and in good faith.”).

46. The Debtors submit that the terms and conditions of the DIP Financing

Documents are reasonable and appropriate under the circumstances, and the proceeds of the DIP

Facilities will be used only for purposes that are permissible under the Bankruptcy Code.

Further, no consideration is being provided to any party to the DIP Financing Documents other

than as described herein. Accordingly, the Bankruptcy Court should find that the DIP Lender

Parties are “good faith” lenders within the meaning of section 364(e) of the Bankruptcy Code

and are entitled to all of the protections afforded by that section.

Immediate Relief Is Required to Avoid Immediate and Irreparable Harm

47. The Court may grant interim relief in respect of a motion filed pursuant to section

363(c) or 364 of the Bankruptcy Code and to repay obligations arising prior to the Petition Date

where, as here, interim relief is “necessary to avoid immediate and irreparable harm to the estate

pending a final hearing.” Fed. R. Bankr. P. 4001(b)(2), (c)(2); 6003(b). As discussed in the

Richards Declaration, the Debtors and their estates will suffer immediate and irreparable harm if

the interim relief requested herein, including authorizing the Debtors to use the Cash Collateral

and to borrow up to $13.6 million under the DIP Facilities, is not granted promptly after the

Petition Date. The Debtors anticipate that the commencement of these chapter 11 cases will

significantly and immediately increase the demands on their liquidity as a result of, among other


39

things, the costs of administering these chapter 11 cases, implementing critical restructuring

initiatives, and addressing key constituents’ concerns regarding the Debtors’ financial health and

ability to continue operations in light of these chapter 11 cases. Accordingly, the Debtors have an

immediate need for access to liquidity to, among other things, continue the operation of their

business, maintain important relationships with customers, landlords and franchisees, meet

payroll, procure goods and services from vendors and suppliers and otherwise satisfy their

working capital and operational needs, all of which are required to preserve and maintain the

Debtors’ going concern value for the benefit of all parties in interest.

48. The Debtors believe that the current Budget and its projections provide an

accurate reflection of the Debtors’ funding requirements over the identified period, will allow the

Debtors to meet their obligations‒including the administrative expenses of these chapter 11

cases‒and are reasonable and appropriate under the circumstances.

49. The importance of a debtor’s ability to secure postpetition financing to prevent

immediate and irreparable harm to its estate has been repeatedly recognized in this district in

similar circumstances. See, e.g., In re SunEdison, Inc., Case No. 16-10992 (SMB) (Bankr.

S.D.N.Y. June 9, 2016) (relief necessary to avoid immediate and irreparable harm to the

Debtors); In re MPM Silicones, LLC, Case No. 14-22503 (RDD) (Bankr. S.D.N.Y. May 23,

2014) (same); In re United Retail Grp., Inc., No. 12-10405 (SMB) (Bankr. S.D.N.Y. Feb. 2,

2012) (same); In re Sbarro, Inc., No. 11-11527 (SCC) (Bankr. S.D.N.Y. Apr. 5, 2011) (same); In

re MSR Resort Golf Course LLC, No. 11-10372 (SHL) (Bankr. S.D.N.Y. Mar. 16, 2011) (same);

In re Insight Health Servs. Holdings Corp., No. 10-16564 (AJG) (Bankr. S.D.N.Y. Jan. 4, 2011).

Accordingly, for all of the reasons set forth above, prompt entry of the Interim Order is


40

necessary to avert immediate and irreparable harm to the Debtors’ estates and is consistent with,

and warranted under, Bankruptcy Rules 4001(b)(2) and (c)(2).

Request for a Final Hearing

50. Pursuant to Bankruptcy Rules 4001(b)(2) and 4001(c)(2), the Debtors request that

the Court set a date that is as soon as practicable, and in no event later than 25 days after the

Petition Date, to hold a hearing to consider entry of the Final Order and the permanent approval

of the relief requested in this Motion and fix the time and date prior to the Final Hearing for

parties to file objections to this Motion.

Waiver of Bankruptcy Rule 6004(a) and 6004(h)

51. To successfully implement the foregoing, the Debtors request that the

Bankruptcy Court enter an order providing that notice of the relief requested herein satisfies

Bankruptcy Rule 6004(a) and that the Debtors have established cause to exclude such relief from

the 14-day stay period under Bankruptcy Rule 6004(h).

Motion Practice

52. This Motion includes citations to the applicable rules and statutory authorities

upon which the relief requested herein is predicated and a discussion of their application to this

Motion. Accordingly, the Debtors submit that this Motion satisfies Local Rule 9013-1(a).

Notice

53. The Debtors have provided notice of this Motion to: (a) the Office of the U.S.

Trustee for the Southern District of New York (the “U.S. Trustee”); (b) the holders of the 30

largest unsecured claims against the Debtors (on a consolidated basis); (c) the Debtors’

prepetition secured lenders; (d) counsel to the Debtors’ prepetition secured lenders; (e) the DIP

Lender Parties; (f) counsel to the DIP Lender Parties; (e) the United States Attorney’s Office for

the Southern District of New York; (f) the Internal Revenue Service; (g) the United States


41

Securities and Exchange Commission; (h) all parties known, after reasonable inquiry, to have

asserted a lien or security interest in any of the Debtors’ assets; and (k) any party that has

requested notice pursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested,

the Debtors respectfully submit that no further notice is necessary.

No Prior Request

54. No prior request for the relief sought in this Motion has been made to this or any

other court.

[Remainder of page intentionally left blank.]


WHEREFORE, for the reasons set forth herein and in the First Day Declaration and the

Richards Declaration, the Debtors respectfully request that this Court (a) enter the Interim Order

and the Final Order granting the relief requested herein on an interim and permanent basis,

respectively, and (b) grant such other and further relief as the Court deems appropriate.

Dated: August 27, 2018 Respectfully submitted, New York, New York

FOLEY & LARDNER LLP

/s/ Richard J. Bernard Richard J. Bernard FOLEY & LARDNER LLP 90 Park Avenue New York, New York 10016-1314 Telephone: (212) 682-7474 Facsimile: (212) 687-2329 Email: [email protected]

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John P. Melko (pro hac vice pending) FOLEY & LARDNER LLP 1000 Louisiana Street, Suite 2000 Houston, TX 77002-2099 Telephone: (713) 276-5500 Facsimile: (713) 276-5555 Email: [email protected]

Proposed Counsel for Debtors and Debtors in Possession


EXHIBIT A

Interim Order


UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

INTERIM ORDER (1) AUTHORIZING THE DEBTORSTO OBTAIN POST-PETITION FINANCING, GRANTING

SENIOR POSTPETITION SECURITY INTERESTS AND ACCORDING SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS PURSUANT TO

SECTIONS 364(c) AND 364(d) OF THE BANKRUPTCY CODE, (2) AUTHORIZING THE USE OF CASH COLLATERAL, (3) GRANTING ADEQUATE PROTECTION,

(4) MODIFYING THE AUTOMATIC STAY, AND (5) GRANTING RELATED RELIEF

Upon the motion (the “Motion”) of the above-captioned debtors and debtors in

possession (collectively, the “Debtors”) seeking, among other things:2

(1) authority pursuant to sections 363 and 364(c) and (d) to obtain debtor-in-possession secured financing in the form of:

(a) a senior, secured, priming and superpriority revolving credit facility (the “DIP Revolving Facility”) issued pursuant to the terms of (i) this Order, (ii) an order approving the Motion on a final basis (the “Final Order”), (iii) the Debtor-In-Possession Credit and Security Agreement, by and among the Debtors and CNH Finance Fund I, L.P. (the “DIP Revolving Credit Agreement”), and (iv) the “Loan Documents” as defined in the DIP Revolving Credit Agreement (collectively, with the DIP Revolving Credit Agreement, the “DIP Revolving Financing Documents”); and

(b) a senior, secured, priming and superpriority term credit facility (the “DIP Term Facility”) issued pursuant to the terms of (i) this Order, (ii) the Final Order, and (iii) that certain Terms and Conditions of Proposed Senior Secured, Super-Priority Debtor-in-Possession

1 The Debtors in the above-captioned chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are Hooper Holmes, Inc. (9359), Hooper Wellness, LLC (6005), Accountable Health Solutions, LLC (9625), Hooper Distribution Services, LLC (6838), Hooper Information Services, Inc. (4927), Hooper Kit Services, LLC (8378), and Provant Health Solutions, LLC (8511). The location of the Debtors’ corporate headquarters is 560 N. Rogers Rd., Olathe, Kansas 66286. 2 Capitalized terms used and not defined have the meanings given to such terms elsewhere in the Motion or the DIP Loan Agreements attached hereto.

In re:

HOOPER HOLMES, INC., et al.

Debtors.1

))))))))

Chapter 11

Case No. 18-23302 (RDD)

Jointly Administered


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Credit Facility, by and among the Debtors and SWK Funding LLC (the “SWK DIP Term Sheet” and collectively, with this Order and the Final Order, the “DIP Term Financing Documents”);

(2) the grant to each of (i) SWK Funding LLC (the “DIP Term Agent”) for itself and each

of the lenders under the DIP Term Financing Documents (the “DIP Term Lenders”, and collectively, with the DIP Term Agent, the “DIP Term Secured Parties”), and (ii) CNH Finance Fund I, L.P., as lender (referred to herein for convenience only as the “DIP Revolving Agent”, and collectively, with the DIP Term Agent, the “DIP Agents”) for itself as lender under the DIP Revolving Financing Documents (the “DIP Revolving Lender”, and, together with any other lenders under the DIP Revolving Credit Agreement from time to time, the “DIP Revolving Secured Parties”), of:

(a) superpriority administrative claim status pursuant to sections 364(c)(1) and

507(b) of the Bankruptcy Code in accordance with the terms of this Order; and (b) senior, secured, and priming liens upon the DIP Collateral (as defined herein)

in accordance with the terms of this Order; (3) authorization for the Debtors’ use of cash collateral whenever or wherever acquired,

and the proceeds of all collateral pledged to the Prepetition Term Secured Parties (as defined below) and Prepetition Revolving Secured Parties (as defined below), as contemplated by section 363 of the Bankruptcy Code in accordance with the terms set forth herein;

(4) a grant of adequate protection to the Prepetition Term Secured Parties and Prepetition

Revolving Secured Parties (as defined below) in accordance with the terms set forth herein; (5) modification of the automatic stay to the extent hereinafter set forth and waiving the

fourteen (14) day stay provisions of Federal Rule of Bankruptcy Procedure 4001(a)(3) and 6004(h); and

(6) a final hearing setting for the Motion for entry of an order authorizing the DIP

Revolving Facility, DIP Term Facility, and use of cash collateral on a final basis. Notice of the Motion, the relief requested therein, and the Interim Hearing (as defined

below) (the “Notice”) having been served by the Debtors in accordance with Rule 4001(c) on: (i) the DIP Term Agent, DIP Term Lenders, DIP Revolving Agent, DIP Revolving Lender, the Prepetition Term Secured Parties, and the Prepetition Revolving Secured Parties; (ii) the United States Trustee for the Southern District of New York (the “U.S. Trustee”); (iii) the holders of the thirty (30) largest unsecured claims against the Debtors’ estates; (iv) all parties known to the Debtors who hold any liens or security interest in the Debtors’ assets who have filed UCC-1 financing statements against the Debtor, or who, to the Debtors’ knowledge, have asserted any liens on any of the Debtors’ assets; (v) the Internal Revenue Service; (vi) the United States Securities and Exchange Commission; (vii) the United States Attorney’s Office for the Southern District of New York; and (viii) any party that has requested notice pursuant to Bankruptcy Rule 2002.


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The Court held an interim hearing with respect to the Motion on August 28, 2018 (the

“Interim Hearing”).

After the Motion and the proceedings before the Court at the Interim Hearing; and all

objections, if any, to the interim relief requested in the Motion having been withdrawn, resolved

or overruled by the Court as reflected on the record established by the Debtors at the Interim

Hearing;

THE COURT HEREBY MAKES THE FOLLOWING FINDINGS OF FACT AND

CONCLUSIONS OF LAW:3

A. On August 27, 2018 (the “Petition Date”), the Debtors filed voluntary petitions

for relief pursuant to Chapter 11 of title 11, United States Code, 11 U.S.C. §§ 101-1532 (the

“Bankruptcy Code”);4

B. The Debtors are continuing in the management and operation of their business

pursuant to sections 1107 and 1108, and no trustee or examiner has been appointed;

C. The Debtors gave notice of the Motion pursuant requirements imposed by the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and the Local Rules of

Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the Southern

District of New York (the “Local Rules”);

D. The Court has core jurisdiction over the Debtors’ bankruptcy cases, the Motion,

and the parties and property affected by this Order pursuant to 28 U.S.C. §§ 157(b) and 1334,

and venue is proper before the Court pursuant to 28 U.S.C. §§ 1408 and 1409;

3 To the extent, any findings of fact constitute conclusions of law, they are adopted as such, and vice versa, pursuant to Fed. R. Bankr. P. 7052. 4 Unless otherwise noted, all statutory references are to the Bankruptcy Code.


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E. As of the date hereof, the United States Trustee has not yet appointed an official

committee of unsecured creditors in this case pursuant to section 1102 (a “Statutory

Committee”);

F. Each of the Debtors has admitted, represented and stipulated, without prejudice to

the rights of third parties or any Statutory Committee set forth in this Order, the following

(collectively, the “Stipulations”):

(1) As of the Petition Date, one or more of the Debtors was party to an

Amended and Restated Credit Agreement dated as of May 11, 2017 (such agreement, as

amended and existing immediately prior to the Petition Date, the “Prepetition Term

Credit Agreement”), an Amended and Restated Guarantee and Collateral Agreement,

dated as of May 11, 2017 (the “Prepetition Term Collateral Agreement”), and other

documents, instruments, and agreements delivered in connection with the Prepetition

Term Credit Agreement and Prepetition Term Collateral Agreement (such documents,

collectively with the Prepetition Term Credit Agreement and Prepetition Term Collateral

Agreement, the “Prepetition Term Loan Documents”) with SWK Funding LLC as agent

(in such capacity, the “Prepetition Term Agent”) and the other lenders party thereto, as

lenders (in such capacity, the “Prepetition Term Lenders” and together with the

Prepetition Term Agent, in such capacities, the “Prepetition Term Secured Parties”),

pursuant to which (a) each of the Debtors is indebted to the Prepetition Term Secured

Parties, without defense, counterclaim, recoupment or offset of any kind, in the

approximate non-contingent liquidated amount of not less than $18,717,772.95 as of


respect of such obligations existing immediately prior to the Petition Date (such


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obligations, the “Prepetition Term Loan Obligations”), and (b) such Prepetition Term

Loan Obligations are (and were as of the Petition Date) secured by valid, enforceable,

properly perfected, and unavoidable liens on and security interests encumbering (the

“Prepetition Term Liens”) substantially all assets of the Debtors (the “Prepetition

Collateral”), which liens were subject only to any Prepetition Revolving Liens of the

Prepetition Revolving Secured Parties in the Revolving Loan Priority Collateral (as such

term is defined in the Intercreditor Agreement);

(2) As of the Petition Date, one or more of the Debtors was party to that

certain Credit and Security Agreement, dated as of April 29, 2016 (as amended from time

to time, the “Prepetition Revolving Credit Agreement”, and collectively with the Loan

Documents (as such term is defined in the Prepetition Revolving Credit Agreement), the

“Prepetition Revolving Loan Documents”) by and among the Debtors as borrowers and

CNH Finance Fund I, L.P., as lender (the “Prepetition Revolving Lender”, which is also

referred to herein for convenience only as the “Prepetition Revolving Agent”, and

collectively with and any other lenders party to the Prepetition Revolving Credit

Agreement as lenders from time to time, the “Prepetition Revolving Secured Parties”),

pursuant to which (a) each of the Debtors is indebted to the Prepetition Revolving

Secured Parties, without defense, counterclaim, recoupment or offset of any kind, in the

approximate non-contingent, liquidated amount of not less than $4,754,847.29 as of


respect of the Prepetition Revolving Loan Document obligations existing immediately

prior to the Petition Date (such obligations, the “Prepetition Revolving Loan

Obligations”), and (b) such Prepetition Revolving Loan Obligations are (and were as of


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the Petition Date) secured by valid, enforceable, properly perfected, and unavoidable

liens (the “Prepetition Revolving Liens”) on and security interests encumbering the

Prepetition Collateral, which liens were subject only to any Prepetition Term Liens of the

Prepetition Term Secured Parties in the Term Loan Priority Collateral (as such term is

defined in the Intercreditor Agreement);

(3) As of the Petition Date, the Prepetition Revolving Agent and the

Prepetition Term Agent are parties to an Intercreditor Agreement, dated as of April 29,

2016 (as amended, modified, and/or supplemented, the “Intercreditor Agreement”),

which, among other things, provides for the relative priority of the respective prepetition

liens and security interests of the Prepetition Revolving Secured Parties and the

Prepetition Term Secured Parties in the Prepetition Collateral, with the Prepetition

Revolving Secured Parties having priority over the Prepetition Term Secured Parties in

the Revolving Loan Priority Collateral (as such term is defined in the Intercreditor

Agreement) and the Prepetition Term Secured Parties having priority over the Prepetition

Revolving Secured Parties in the Term Loan Priority Collateral (as such term is defined

in the Intercreditor Agreement). The Debtors acknowledge the existence of the terms of

the Intercreditor Agreement;

(4) The DIP Term Secured Parties and DIP Revolving Secured Parties are

willing to provide postpetition financing to the Debtors through DIP Term Facility and

DIP Revolving Facility and the terms of the DIP Term Financing Documents and DIP

Revolving Financing Documents;

(5) The Prepetition Term Secured Parties consent to the Debtors’ use of the

Prepetition Collateral and cash collateral (as such term is defined in Bankruptcy Code


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section 363(a)) only upon the conditions contained in this Order and the DIP Term


(6) The Prepetition Revolving Secured Parties consent to the Debtors’ use of

the Prepetition Collateral and cash collateral (as such term is defined in Bankruptcy Code

section 363(a)) only upon the conditions contained in this Order and the DIP Revolving



against the Prepetition Term Secured Parties that would in any manner impair, reduce or

otherwise modify the Prepetition Term Loan Obligations or the validly perfected

Prepetition Term Liens upon the Prepetition Collateral;


against the Prepetition Revolving Secured Parties that would in any manner impair,

reduce or otherwise modify the Prepetition Revolving Loan Obligations or the validly

perfected Prepetition Revolving Liens upon the Prepetition Collateral;

(9) The Prepetition Term Loan Obligations constitute valid, binding




Term Loan Obligations and/or the security interests liens of the Prepetition Term Secured

Parties upon the Prepetition Collateral, or which would in any way reduce the obligation

of any Debtor to pay in full all of the Prepetition Term Loan Obligations;

(10) No portion of the Prepetition Term Loan Obligations or any payments

made to any or all of the Prepetition Term Loan Secured Parties are subject to avoidance,


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disallowance, disgorgement, recharacterization, recovery, subordination, attack, offset,

counterclaim, defense, or “claim” (as defined in the Bankruptcy Code) of any kind

pursuant to the Bankruptcy Code or applicable non-bankruptcy law;

(11) The Prepetition Revolving Loan Obligations constitute valid, binding




Revolving Loan Obligations and/or the security interests liens of the Prepetition

Revolving Secured Parties upon the Prepetition Collateral, or which would in any way

reduce the obligation of any Debtor to pay in full all of the Prepetition Revolving Loan

Obligations;

(12) No portion of the Prepetition Revolving Loan Obligations or any

payments made to any or all of the Prepetition Revolving Loan Secured Parties are

subject to avoidance, disallowance, disgorgement, recharacterization, recovery,

subordination, attack, offset, counterclaim, defense, or “claim” (as defined in the

Bankruptcy Code) of any kind pursuant to the Bankruptcy Code or applicable non-

bankruptcy law.

(13) All of the Debtors’ cash, including any cash in deposit accounts of the

Debtors, wherever located, constitutes Cash Collateral.

(14) The Debtors reasonably and in good faith believe that the use of Cash

Collateral and the loans, advances, and other financial accommodations to be obtained

pursuant to the DIP Revolving Facility and DIP Term Facility are sufficient to fund all

projected legitimate and allowable expenses of the Debtors’ Chapter 11 cases from the


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Petition Date during the period to which the Budget (as approved by the DIP Term Agent

and DIP Revolving Agent) pertains; and

(15) Each of the Debtors is a duly organized, validly existing limited liability

company or corporation and has the requisite power and authority to own, lease, and

operate its property, including, without limitation, the DIP Collateral. Each of the

Debtors has the requisite power and authority to enter into, execute, deliver, and perform

its obligations under the DIP Term Financing Documents, DIP Revolving Financing

Documents, and this Order and to incur the obligations provided for thereon. Except as

may be explicitly required in the DIP Term Financing Documents or DIP Revolving

Financing Documents, no consent or waiver of, filing with, authorization, approval or

other action by any shareholder, any federal, state, or other governmental authority or

regulatory body or any other person or entity (other than the DIP Term Secured Parties or

DIP Revolving Secured Parties), which has not already been obtained or done, is required

in connection with the execution, delivery and performance by any Debtor of any of the

documents required as a condition to the validity or enforceability of the DIP Term

Financing Documents or DIP Revolving Financing Documents, other than entry by this

Court of this Order;

G. The Debtors are unable to obtain sufficient levels of unsecured credit allowable

under section 503(b)(1) as an administrative expense necessary to maintain and conduct its

business;

H. The Debtors are unable to obtain secured credit from any source except from the

DIP Term Secured Parties and the DIP Revolving Secured Parties under the terms and conditions

provided in this Order;


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I. All cash of the Debtors, wherever located on the Petition Date, represents (i)

proceeds of loans or other financial accommodations provided to the Debtors by either (x) the

Prepetition Term Secured Parties under Prepetition Term Loan Documents; or (y) Prepetition

Revolving Secured Parties under the Prepetition Revolving Loan Documents; or (ii) proceeds of

Prepetition Collateral. Such funds (the “Cash Collateral”) constitute cash collateral within the

meaning of section 363;

J. It is in the best interest of the Debtors’ estate that the Debtors be allowed to enter

into the DIP Term Facility and DIP Revolving Facility in order to obtain postpetition secured

financing from the DIP Term Secured Parties and DIP Revolving Secured Parties, and use the

Prepetition Collateral and Cash Collateral subject to and in accordance with the terms of this

Order, the DIP Term Financing Documents, and the DIP Revolving Financing Documents, and

to grant adequate protection to the Prepetition Term Secured Parties and Prepetition Revolving

Secured Parties on account of the Debtors’ respective Prepetition Term Loan Obligations and

Prepetition Revolving Loan Obligations, on an interim basis under the terms and conditions set

forth herein and in the DIP Term Financing Documents and DIP Revolving Financing

Documents, as such is necessary to avoid immediate and irreparable harm to the Debtors’ estates


K. The Debtors believe that the extension of credit and financial accommodations

under the DIP Term Facility, DIP Revolving Facility, DIP Term Financing Documents, and DIP

Revolving Financing Documents are fair, reasonable, in good faith, negotiated at arm’s length,

reflect the Debtors’ exercise of prudent business judgment, and are supported by reasonably

equivalent value and fair consideration and the DIP Term Secured Parties and DIP Revolving

Secured Parties are entitled to the protections of section 364(e);


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L. The Debtors require access to the funding available under the DIP Term Facility,

DIP Revolving Facility, DIP Term Financing Documents, and the DIP Revolving Financing

Documents in order to satisfy administrative expenses associated with the operation of the

Debtors’ business as a going concern and other costs relating to the administration of these

chapter 11 cases, and in order to avoid immediate and irreparable harm to the Debtors’ estates


M. The Prepetition Term Secured Parties and Prepetition Revolving Secured Parties

are unwilling to consent to use of the Prepetition Collateral by the Debtors, except under the

terms of the DIP Term Financing Documents, DIP Revolving Financing Documents, and this

Order assuring that the liens and the various claims, superpriority claims, and other protections

granted in this Order will not be affected by any subsequent reversal or modification of this

Order or any other order, as provided in section 364(e), which is applicable to the postpetition

financing arrangement contemplated in the DIP Term Financing Documents, DIP Revolving

Financing Documents, and the use of Cash Collateral contemplated this Order; and

N. Good and sufficient cause exists for the issuance of this Order, to prevent

immediate and irreparable harm to the Debtors’ estates.

Based upon the foregoing, and after due consideration and good cause appearing therefor;

IT IS HEREBY ORDERED, ADJUDGED AND DECREED that:

1. The Motion is granted on an interim basis effective as of the Petition Date. The

Debtors are authorized, pursuant to sections 363 and 364, to enter into the DIP Term Facility,

DIP Term Financing Documents, DIP Revolving Facility, and DIP Revolving Facility

Documents, to execute such other and additional documents necessary or desired to implement

the DIP Term Facility, DIP Term Financing Documents, DIP Revolving Facility, or DIP

Revolving Facility Documents, to obtain postpetition secured financing from the DIP Term


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Secured Parties and DIP Revolving Secured Parties, and to use the Prepetition Collateral, Cash

Collateral, and the proceeds and products thereof, pursuant to the terms and conditions of the

DIP Term Financing Documents, DIP Revolving Financing Documents, and this Order to avoid

immediate and irreparable harm to the Debtors’ estates pending the Final Hearing. The Debtors

shall use the advances obtained under the DIP Term Facility, the advances obtained under the

DIP Revolving Facility, and the DIP Collateral (including Cash Collateral) only for the purposes

and in the amounts set forth herein, in the DIP Term Financing Documents, the DIP Revolving

Financing Documents, and the budget attached hereto as Exhibit 1 (the “Budget”), subject to the

terms and conditions therein. Neither the DIP Term Secured Parties or DIP Revolving Secured

Parties shall have any obligation to make any DIP Term Facility or DIP Revolving Facility

advances (as applicable) in excess of the amounts and times set forth in the Budget and

applicable DIP Term Financing Documents and DIP Revolving Financing Documents.

2. With respect to the Budget:

(a) The Debtors’ actual total cash receipts and disbursements from operations line

items, other than fees and expenses of third party professionals engaged by or for the benefit of

the Debtors or their estates (such fees, “Professional Fees”), shall each be adhered to on a weekly

period basis and a cumulative basis for the Budget period then ending, subject to the Budget

Variances described below (provided, however, that amounts not disbursed in a line item shall be

deemed to roll over to subsequent weeks);

(b) Actual total cash receipts and cash disbursement from operations line items

(which shall not and do not include Professional Fees) shall not vary unfavorably (including any

amounts deemed to roll over from a previous week due to not being spent) by (i) more than ten

percent (10%) per line item on a weekly basis; or (iii) ten percent (10%) per line item on a


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cumulative basis for that portion of the Budget period then ended (such variances, the “Budget

Variances”);

(c) For all Professional Fees within the Budget, other than the professional fees of

the DIP Term Secured Parties or DIP Revolving Secured Parties (which shall not be limited by

the Budget, but shall be subject to the terms of paragraph 6 herein), the Debtors shall not allow

actual disbursements for each Professional Fee line item (and for the avoidance of doubt, each

professional receiving Professional Fees shall be reflected on its own line item) to be more than

the budgeted disbursements for such Professional Fee line item during the cumulative period

from the Petition Date to the end of the applicable current weekly Budget period.

3. No proceeds of the DIP Term Facility, DIP Revolving Facility, or Cash Collateral

shall be used to:

A. Permit the Debtors or any other party-in-interest to institute any

proceeding to determine (i) the validity, perfection, or priority of any security interests in

favor of the Prepetition Revolving Secured Parties, the Prepetition Term Secured Parties,

the DIP Revolving Secured Parties, or the DIP Term Secured Parties or (ii) the

enforceability of any of the Debtors’ obligations under, or the obligations of any

guarantor under, the Prepetition Revolving Loan Documents, Prepetition Term Loan

Documents, DIP Revolving Financing Documents, or DIP Term Financing Documents;

B. Investigate, commence, prosecute or defend (or support any other person

or entity in investigating, commencing, prosecuting or defending) any claim, motion,

proceeding or cause of action against the Prepetition Revolving Secured Parties, the

Prepetition Term Secured Parties, the DIP Revolving Secured Parties, or the DIP Term

Secured Parties or any of their agents, attorneys, advisors or representatives, including,


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without limitation, claims or causes of action relating to lender liability or subordination

claims;

C. Investigate, commence, prosecute, or defend (or support any other person

or entity in investigating, commencing, prosecuting, or defending) any claim or

proceeding or cause of action to disallow or challenge the obligations of any Debtor or

guarantor under the Prepetition Revolving Loan Documents, the Prepetition Term Loan

Documents, the DIP Revolving Financing Documents, or the DIP Term Financing

Documents; provided, however, that a Statutory Committee (if any) and its professionals

shall be allowed to use proceeds of the DIP Revolving Facility, DIP Term Facility, or

Cash Collateral in a collective amount not to exceed ten thousand dollars ($25,000) to

investigate the validity of the Prepetition Term Liens and Prepetition Revolving Liens

(the “Committee Budget”); or

D. Fund any acquisitions, capital expenditures, capital leases, or similar

expenditures other than those specifically set forth in the Budget.

4. Pursuant to sections 363 and 364(c) and (d):

A. The DIP Term Facility funds advanced pursuant to the terms of this Order

(collectively, the “Interim DIP Term Advances”) shall be allowed administrative

expenses of each Debtor’s estate, which shall have priority in payment over any other

indebtedness and/or obligations now in existence or incurred hereafter by any Debtor and

over all administrative expenses or charges against property arising in each Debtor’s

Chapter 11 case and any superseding Chapter 7 case including, without limitation, those

specified in Bankruptcy Code sections 105, 326, 328, 330, 331, 503(b), 506(c) (subject to

the entry of the Final Order), 507(a), 507(b), 1113 or 1114, subject and junior only to the


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Carve-Out (as hereinafter defined), but pari-passu with the DIP Revolving Superpriority

Claim (as defined below) (such claim, the “DIP Term Superpriority Claim”).

B. The DIP Revolving Facility funds advanced pursuant to the terms of this

Order (collectively, the “Interim DIP Revolving Advances” and collectively, with the

Interim DIP Term Advances, the “Interim DIP Advances”) shall be allowed

administrative expenses of each Debtor’s estate, which shall have priority in payment

over any other indebtedness and/or obligations now in existence or incurred hereafter by

any Debtor and over all administrative expenses or charges against property arising in

each Debtor’s Chapter 11 case and any superseding Chapter 7 case including, without

limitation, those specified in Bankruptcy Code sections 105, 326, 328, 330, 331, 503(b),

506(c) (subject to the entry of the Final Order), 507(a), 507(b), 1113 or 1114, subject and

junior only to the Carve-Out (as hereinafter defined), but pari-passu with the DIP Term

Superpriority Claim (such claim, the “DIP Revolving Superpriority Claim”, and

collectively, with the DIP Term Superpriority Claim, the “DIP Superpriority Claims”).

C. The time of payment of the Interim DIP Advances shall not be altered,

extended or impaired by any plan or plans of reorganization that may hereafter be

accepted or confirmed or any further orders of the Court which hereafter may be entered.

5. To the extent permitted by the Bankruptcy Code:

A. Interest on the Prepetition Term Loan Obligations shall accrue from and

after the Petition Date at the rate set forth in the Prepetition Term Loan Documents and

be payable along with interest accruing on the Interim DIP Term Advances, as set forth in

the Budget and the DIP Term Financing Documents.


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B. Interest on the Prepetition Revolving Loan Obligations shall accrue from

and after the Petition Date at the rate set forth in the Prepetition Revolving Loan

Documents and be payable along with interest accruing on the Interim DIP Revolving

Advances, as set forth in the Budget and the DIP Revolving Financing Documents.

6. The reasonable fees and expenses of the DIP Term Secured Parties and DIP

Revolving Secured Parties, whether incurred before or after the Petition Date, shall be payable as

set forth in the applicable DIP Term Financing Documents or DIP Revolving Financing

Documents, without further notice, motion, or application to, order of, or hearing before, the

Court (except such notice as may be required in the applicable DIP Financing Documents);

provided, however, any DIP Term Secured Party or DIP Revolving Secured Party submitting

requests for reimbursement shall submit statements of its professionals’ fees (with time and

expense detail included) to the Debtors, the U.S. Trustee, and counsel for any Statutory

Committee and such parties shall have fourteen (14) days following the receipt of such

statements to object to the reasonableness of the fees and expenses included in any such invoices.

If no objection is received within such fourteen (14) day period, the Debtors are authorized to

pay the fees and expenses requested, without further notice or Court order. Although fees

incurred by professionals retained by the DIP Term Secured Parties and DIP Revolving Secured

Parties are not limited by the Budget: (i) No DIP Term Facility advances shall be used to pay any

fees, costs, or expenses of professionals of the DIP Revolving Secured Parties in excess of the

amounts set for such professionals set forth in the Budget; and (ii) No DIP Revolving Facility

advances shall be used to pay any fees, costs, or expenses of professionals of the DIP Term

Secured Parties in excess of the amounts set forth for such professionals set forth in the Budget.

7. Subject to entry of the Final Order:


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A. All Prepetition Term Loan Obligations relating to advances made under

the Prepetition Term Loan Documents from and after the fifth amendment of the

Prepetition Term Credit Agreement (dated May 31, 2018) shall become DIP Term

Facility obligations under the DIP Term Financing Documents.

B. All Prepetition Revolving Loan Obligations relating to advances made

under the Prepetition Revolving Loan Documents shall become DIP Revolving Facility

obligations under the DIP Revolving Financing Documents.

8. Pursuant to sections 363, 364(c), and 364(d), as security for the Interim DIP

Advances and other postpetition costs payable under the DIP Revolving Financing Documents

and DIP Term Financing Documents, the Debtors are hereby authorized to and are hereby

deemed to grant to:

A. The DIP Term Agent a valid, binding and enforceable lien, mortgage

and/or security interest (a “Lien,” and as so granted to the DIP Term Agent, the “DIP

Term Lien”) in all of the Debtors’ presently owned or hereafter acquired property and

assets, whether such property and assets were acquired before or after the Petition Date,

of any kind or nature, whether real or personal, tangible or intangible, wherever located,

and the proceeds and products thereof (collectively, the “DIP Collateral”), but excluding

any causes of action that could be brought pursuant to sections 544, 545, 547 and 548 of

the Bankruptcy Code, or any applicable state fraudulent transfer statutes (the “Avoidance

Actions”), but, subject to entry of the Final Order, including proceeds of (and any

property received in respect of) Avoidance Actions (such proceeds, “Avoidance

Proceeds”); and


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B. The DIP Revolving Agent a valid, binding and enforceable Lien (as so

granted to the DIP Revolving Agent, the “DIP Revolving Lien”) in all of the DIP

Collateral, but excluding any Avoidance Actions, but, subject to entry of the Final Order,

including Avoidance Proceeds.

9. Pursuant to sections 364(c) and (d):

A. The DIP Term Lien shall be a first priority senior and priming lien on the

DIP Collateral, subject and junior only to:


Collateral (such term is used herein throughout as it is defined in the Intercreditor

Agreement), (a) the Carve-Out, and (b) valid, enforceable, properly perfected, and

unavoidable prepetition Liens (including any Liens that are perfected after the

Petition Date that are afforded priority due to the express relation back of the

perfection of such lien to a date prior to the Petition Date as permitted by

Bankruptcy Code section 546(b)) that are senior to both the Prepetition Term

Liens and Prepetition Revolving Liens (“Senior Third Party Liens”),


Priority Collateral (such term is used herein throughout as it is defined in the

Intercreditor Agreement), (a) the Carve-Out, (b) Senior Third Party Liens, and (c)

the DIP Revolving Liens, Prepetition Revolving Liens, and the Revolving


(3) With respect to any DIP Collateral that would not fit within the

definition of Revolving Loan Priority Collateral or Term Loan Priority Collateral,

and was not or could not have been subject to a lien prior to the Petition Date


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securing the Prepetition Revolving Loan Obligations or Prepetition Term Loan

Obligations (such DIP collateral defined in this subsection (3), the “New DIP

Collateral”), (a) the Carve-Out, but pari-passu with any liens of the DIP

Revolving Agent upon such New DIP Collateral.

B. The DIP Revolving Lien shall be a first priority senior and priming lien on

the DIP Collateral, subject and junior only to:


Priority Collateral, (a) the Carve-Out, and (b) Senior Third Party Liens,


Collateral, (a) the Carve-Out, (b) Senior Third Party Liens, and (c) the DIP Term

Liens, the Prepetition Term Liens, and the Term Loan Adequate Protection Liens

(as such term is defined below).

(3) With respect to any New DIP Collateral, subject to the Carve-Out,

but pari-passu with any liens of the DIP Term Agent upon such New DIP

Collateral.

C. Subject only to the provisions set forth in the foregoing paragraph 9 hereof

(the “DIP Priority Provisions”), neither the DIP Revolving Lien nor DIP Term Lien shall

be subject or subordinate to any Lien which is avoided and which would otherwise be

preserved for the benefit of any Debtor’s estate under section 551.

D. In no event shall any person or entity who pays (or causes to be paid) any

of the obligations under the Prepetition Term Loan Documents be subrogated, in whole

or in part, to any rights, remedies, claims, privileges, liens or security interests granted to

or in favor of, or conferred upon, the DIP Term Secured Parties by the terms of the DIP


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Term Financing Documents or applicable law until such time as the obligations under the

DIP Term Financing Documents and this Order are indefeasibly paid in full, in cash. The

DIP Term Lien shall not be subject or subordinate to Liens arising after the Petition Date,

other than Liens granted pursuant to this Order to the extent set forth in this Order.

E. In no event shall any person or entity who pays (or causes to be paid) any

of the obligations under the Prepetition Revolving Loan Documents be subrogated, in

whole or in part, to any rights, remedies, claims, privileges, liens or security interests

granted to or in favor of, or conferred upon, the DIP Revolving Secured Parties by the

terms of the DIP Revolving Financing Documents or applicable law until such time as the

obligations under the DIP Revolving Financing Documents and this Order are

indefeasibly paid in full, in cash. The DIP Revolving Lien shall not be subject or

subordinate to Liens arising after the Petition Date, other than Liens granted pursuant to

this Order to the extent set forth in this Order.

10. All rents, income, profits, cash, cash in accounts and deposits derived from the

Prepetition Collateral constitute Cash Collateral. Provided that each of the conditions set forth in

this Paragraph are satisfied, the Debtors shall be authorized to use the Cash Collateral only in

accordance with the terms of the Budget, this Order, the DIP Term Financing Documents, and

the DIP Revolving Financing Documents. The satisfaction of each of the following conditions

shall constitute a condition to the Debtors’ authorization to use any Cash Collateral: (i) no Event

of Default under the DIP Term Financing Documents or DIP Revolving Financing Documents

shall exist or be continuing; and (ii) a Termination Event (as defined below) shall not have

occurred. If, on any date, any of such conditions is not satisfied, then the Debtors shall not be

authorized to use any Cash Collateral unless and until such use is consented to in writing by both


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the DIP Term Agent and DIP Revolving Agent in their sole and absolute discretion. Absent

further order of the Court, if a Termination Event occurs, then the Debtors shall remit to the DIP

Revolving Agent or DIP Term Agent (as applicable), subject to payment of the Carve-Out, any

Cash Collateral then in the Debtors’ possession for application to the DIP Term Facility

obligations, DIP Revolving Facility obligations, Prepetition Term Loan Obligations, and

Prepetition Revolving Loan Obligations consistent with the DIP Priority Provisions.

11. Until the indefeasible payment in full of the Prepetition Term Loan Obligations,

the Prepetition Term Secured Parties are entitled to adequate protection of their interests in the

Prepetition Collateral (including Cash Collateral) as a result of (a) the provisions of this Order

granting first priority and/or priming liens on such Prepetition Collateral to the DIP Term Agent

and DIP Revolving Agent for the benefit of the DIP Term Secured Parties and DIP Revolving

Secured Parties, (b) the Debtors’ use of the Prepetition Collateral (including Cash Collateral), (c)

the imposition of the automatic stay pursuant to section 362 of the Bankruptcy Code, or (d)

otherwise, pursuant to sections 361(a), 363(c), and 364(d)(1) of the Bankruptcy Code. The

Prepetition Term Agent, on behalf of and for the benefit of the Prepetition Term Secured Parties,

is hereby granted, solely to the extent of diminution in value of the Prepetition Term Liens in the

Prepetition Collateral from and after the Petition Date, the following:

A. A Lien in all DIP Collateral (the “Term Adequate Protection Lien”)

subject and junior only to:


Collateral, (a) the Carve-Out, (b) the DIP Term Lien, and (c) Senior Third Party

Liens,


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Priority Collateral, (a) the Carve-Out, (b) the DIP Revolving Lien, (c) the DIP

Term Lien, (d) Senior Third Party Liens, and (e) the Prepetition Revolving Liens

and the Revolving Adequate Protection Liens (as such term is defined below).



Lien, but pari-passu with any Revolving Adequate Protection Liens upon such

New DIP Collateral.

B. A postpetition superpriority administrative expense claim (the “Term



of the Bankruptcy Code against each Debtor’s estate to the extent the Term Adequate

Protection Lien does not adequately protect against the diminution in value of the

Prepetition Term Liens, which shall have priority in payment over any and all other

administrative expenses of any kind, including, without limitation, those specified in

sections 105, 326, 328, 330, 331, 503(b), 506(c) (subject to entry of the Final Order),




Advances, provided, however, that the Term Adequate Protection Claim shall be pari-

passu with the Revolving Adequate Protection Claim.


DIP Term Financing Documents, the Debtors shall pay in cash all reasonable and


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Term Agent (including, without limitation, reasonable attorneys’ fees incurred by the

Prepetition Term Agent’s counsel) relating to the Debtors or their restructuring, whether

incurred before, on, or after the Petition Date.

12. Until the indefeasible payment in full of the Prepetition Revolving Loan

Obligations, the Prepetition Revolving Secured Parties are entitled to adequate protection of their

interests in the Prepetition Collateral (including Cash Collateral) as a result of (a) the provisions

of this Order granting first priority and/or priming liens on such Prepetition Collateral to the DIP

Term Agent and DIP Revolving Agent for the benefit of the DIP Term Secured Parties and DIP

Revolving Secured Parties, (b) the Debtors’ use of the Prepetition Collateral (including Cash

Collateral), (c) the imposition of the automatic stay pursuant to section 362 of the Bankruptcy

Code, or (d) otherwise, pursuant to sections 361(a), 363(c), and 364(d)(1) of the Bankruptcy

Code. The Prepetition Revolving Agent, on behalf of and for the benefit of the Prepetition

Revolving Secured Parties, is hereby granted, solely to the extent of diminution in value of the

Prepetition Revolving Liens in the Prepetition Collateral from and after the Petition Date, the

following:

A. A Lien in all DIP Collateral (the “Revolving Adequate Protection Lien”)

junior only to:


Priority Collateral, (a) the Carve-Out, (b) the DIP Revolving Lien, and (c) Senior

Third Party Liens,


Collateral, (a) the Carve-Out, (b) the DIP Revolving Lien, (c) the DIP Term Lien,
